On 17 July 2026, European Commission Executive Vice-President Teresa Ribera and Commissioners Wopke Hoekstra and Dan Jørgensen presented a package of proposals including a review of the Emissions Trading System (ETS), an Electrification Action Plan, and a legislative proposal on future-proof electricity bills. The package aims to align EU climate policy with the 2040 emissions reduction target of 90% and to double the electrification rate from 23% to 46% by 2040.
The ETS review, presented by Commissioner Hoekstra, maintains the existing carbon price trajectory but introduces several changes. Free allocations will be extended after 2030, but companies must invest 100% of the value of free allowances in decarbonisation within Europe. Member States will be required to spend 50% of their national ETS revenues on decarbonising ETS sectors. A new Industrial Decarbonisation Bank with €100 billion in funding, including a €30 billion ETS Investment Booster available before 2030, will support industrial decarbonisation. The ETS scope expands to cover maritime transport (including smaller ships, with exemptions for ferries), aviation (flights landing within 5000 km of Europe's geographic centre from 2029, and private jets), and municipal waste incineration. Additionally, 250 million tonnes of permanent domestic carbon removals will be integrated into the ETS.
The Electrification Action Plan, outlined by Commissioner Jørgensen, aims to double the electrification rate by 2040 through measures to lower electricity prices, accelerate smart meter deployment (50% coverage by 2030, 75% by 2033), achieve 200 GW of storage capacity by 2030, and ensure electricity is taxed less than gas. The plan also promotes electric technologies in industry, homes, and transport, including heat pumps and electric vehicles, with support for social leasing schemes. A framework to phase out €100 billion in fossil fuel subsidies will be proposed later in 2026.
it strengthens the ETS as an investment driver while tightening conditions for free allocations, expands carbon pricing to new sectors, and sets concrete electrification targets. The proposals will now be debated by the European Parliament and Council. The Commission estimates the measures could mobilise hundreds of billions in additional investments in European clean industry and infrastructure.
Stakeholder impacts are mixed. EU industry faces higher compliance costs from expanded ETS scope and mandatory reinvestment of free allowances, but gains access to €100 billion in decarbonisation funding. EU consumers may see higher energy bills in the short term due to carbon pricing on waste incineration and aviation, but benefit from lower electricity taxes and potential savings from heat pumps and smart meters. EU maritime and aviation sectors face new carbon costs but receive substantial revenue recycling (€15 billion annually for maritime, €15 billion between 2029-2040 for aviation) to support sustainable fuel adoption. EU fossil fuel producers and importers face declining demand as electrification accelerates and subsidies are phased out, while clean technology manufacturers (heat pumps, EVs, smart meters) gain from increased demand and policy support. The package balances climate ambition with industrial competitiveness, but its success depends on implementation and member state cooperation.