On 17 July 2026, the European Commission published an impact assessment accompanying legislative proposals to amend the EU Emissions Trading System (EU ETS) to align with the EU's legally binding 2040 climate target of 90% net greenhouse gas reduction from 1990 levels. The package, prepared by DG CLIMA, affects all sectors covered by the EU ETS including industry, aviation, and maritime, and introduces a new EUR 100 billion Industrial Decarbonisation Bank (IDB) to support mature decarbonisation technologies.
The Commission proposes adjusting the EU ETS cap and linear reduction factor to continue issuing new allowances into the 2040s, ensuring a stable carbon price signal beyond 2030. Permanent domestic carbon removals will be integrated via public authority, creating guaranteed emission space for the hardest-to-abate sectors. Free allocation and indirect cost compensation will continue, with a share progressively conditional on investments; the phase-out rate for CBAM sectors is revised. The Market Stability Reserve will be reformed to handle scarcity and support liquidity.
Municipal waste incineration will be integrated into the EU ETS, and the point of accounting for carbon captured in products will be placed downstream. For aviation, effective carbon pricing for departing flights includes deduction of CORSIA offsetting costs; for maritime, emissions priced by the International Maritime Organization (IMO) will be deducted to avoid double pricing. Simplification measures for maritime monitoring, reporting, and verification aim to reduce gaps and duplications.
The preferred option maintains a stable carbon price signal beyond 2030, expands coverage to waste and transport, and boosts financial support via the IDB, while continuing carbon leakage protection and simplifying rules.
EU industry faces continued carbon costs but gains access to EUR 100 billion in IDB funding for mature technologies, with free allocation and indirect cost compensation maintained but increasingly conditional on investments. The aviation sector benefits from deduction of CORSIA costs, reducing double burden. Maritime operators see simplified MRV rules and avoidance of double pricing with IMO measures. EU taxpayers and consumers may face higher costs from expanded ETS coverage to waste incineration, though the IDB aims to lower industrial decarbonisation costs. The legislative proposals will now be transmitted to the European Parliament and the Council for negotiation.