The European Parliament's Committee on the Environment, Climate and Food Safety held a public hearing on 2 June 2026 on the EU Emissions Trading System (ETS), with MEPs staking out divergent positions on the system's future direction. EPP MEP Peter Liese stressed the need to maintain the ETS as the EU's main climate tool while addressing carbon leakage and competitiveness. S&D MEP Mohammed Chahim pushed back against calls to weaken the system, arguing that higher carbon prices are necessary to drive industrial decarbonisation. Greens-EFA MEP Bas Eickhout questioned the effectiveness of free allowances and called for a faster phase-out. ECR MEP Alexandr Vondra expressed concerns over the social impact of rising energy costs and urged more support for energy-intensive industries. Renew MEP Emma Wiesner highlighted the importance of linking the ETS with the Carbon Border Adjustment Mechanism (CBAM) to protect EU industry.
The hearing featured expert testimonies from the European Commission's Director-General for Climate Action, who outlined plans to expand the ETS to new sectors, and from industry representatives who warned against overly ambitious timelines. No formal decisions were taken, but the debate will feed into the upcoming revision of the ETS Directive.
The debate exposed a central cleavage between those prioritising climate ambition through higher carbon prices and faster phase-out of free allowances, and those concerned about competitiveness and social impacts. A faster phase-out of free allowances would increase costs for heavy industry and power generators, potentially driving carbon leakage if CBAM is not fully effective. Conversely, maintaining free allowances or slowing the price trajectory could weaken incentives for industrial decarbonisation, delaying the EU's climate goals. Households would be affected through higher energy costs, though revenues from ETS auctions are used to fund social climate measures. The outcome of the revision will determine the balance between environmental effectiveness and economic competitiveness.
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