Reaction to the European Emissions Trading System (EU ETS) review proposal – a BusinessEurope position paper

Introduction

This paper sets out BusinessEurope’s key messages in response to the Commission’s proposal to review the European Emissions Trading System (EU ETS) published on 17 July 2026. BusinessEurope supports a central role of the EU ETS as a market-based tool in EU’s post-2030 climate framework. A predictable and credible emissions trajectory is essential for achieving both climate objectives but also providing long-term investment certainty and predictability. Overall, the proposal introduces flexibilities acknowledging that the current system needs to be adapted to reflect changing market realities and better incentivise investments in decarbonisation.

However, the proposed conditionalities for free allocation raise concerns as they undermine the key objective of this measure (carbon leakage protection), while the infrastructure and enabling conditions to create a business case for decarbonisation are still missing across the EU. Additionally, several provisions remain insufficiently detailed relying on future secondary legislation. The objective of the reform should be to ensure that companies can profitably invest in decarbonisation backed by clear regulatory certainty, while maintaining effective carbon leakage protection and safeguarding EU competitiveness.