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, while 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, while 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.
Heavy industry faces potential cost increases from higher carbon prices and reduced free allowances, but CBAM linkage could mitigate carbon leakage. Power generators may see accelerated decarbonisation pressure. Aviation could face inclusion in an expanded ETS. Households risk higher energy costs, though social compensation mechanisms could offset impacts. The debate highlighted a trade-off between ambitious climate action and industrial competitiveness, with centre-right and centre-left groups pulling in different directions on the pace of reform.