Renew MEP Cynthia Ní Mhurchú has raised concerns that accumulated free allowances under the EU Emissions Trading System (ETS) could distort competition and undermine the Carbon Border Adjustment Mechanism (CBAM), in a parliamentary question submitted on 25 June 2026. The Irish MEP warned that sectors with large unused free allowances may have an unfair advantage over importers subject to CBAM, potentially creating an uneven playing field.
Ní Mhurchú's question points to a tension between the two flagship EU climate tools: while CBAM is designed to equalise carbon costs for imports, free allowances under the ETS — originally granted to help energy-intensive industries decarbonise — may allow some EU producers to absorb carbon costs more easily than others. This, she argues, could distort competition between operators that have historically benefited from free allocations and those that have not, including importers.
The MEP specifically asks the European Commission to assess the impact of accumulated free allowances on competition and the level playing field in CBAM-covered sectors. She also asks whether the Commission plans to address any imbalances in the upcoming reviews — the CBAM revision is ongoing, and the ETS is scheduled for further review on 15 July 2026. Finally, she presses the Commission on how it ensures that free allowances effectively contribute to decarbonisation objectives, rather than simply accumulating as unused stocks.
The question signals a push for greater coherence between the two carbon pricing instruments, with potential implications for EU producers in energy-intensive sectors, importers subject to CBAM, and the overall effectiveness of EU climate policy. The Commission is expected to reply within approximately six weeks; its answer will indicate whether it shares Ní Mhurchú's concerns and whether adjustments to the free allowance regime are being considered.