On 17 July 2026, the European Commission published a Subsidiarity Grid (SWD(2026)618) accompanying three legislative proposals to amend the EU Emissions Trading System (ETS), the Market Stability Reserve (MSR) Decision, and maritime monitoring, reporting, verification (MRV) and FuelEU rules. The document argues that the objectives of these amendments—driving competitiveness and cost-effective decarbonisation—can only be achieved through coordinated EU-level action, not by individual Member States.
The grid, prepared by DG CLIMA, outlines the legal basis under Article 192(1) TFEU (shared competence for environment), which has underpinned the ETS since its inception in 2003. The Commission contends that climate change is inherently transboundary, and that national carbon markets would be too fragmented to deliver efficient emission reductions, risk environmental dumping, and distort the single market. EU-level action, it argues, ensures cost-efficient reductions, economies of scale, and a stronger global negotiating position.
over 540 public consultation responses, more than 400 position papers, targeted workshops on 29 January 2026, a high-level roundtable on 12 May 2026, and expert group meetings on 3 and 15 June 2026 addressing revised benchmark values. The Commission asserts that the proposals are proportionate, going no further than necessary to achieve the 2040 target of at least 90% net emission reductions. A directive is used for the main ETS amendment to allow Member States flexibility in transposition, while a regulation is chosen for benchmark values to avoid national transposition delays.
The three linked proposals aim to amend Directive 2003/87/EC and Decision (EU) 2015/1814 (ETS and MSR), as well as Regulation (EU) 2015/757 and Regulation (EU) 2023/1805 (maritime MRV and FuelEU), simplifying and streamlining monitoring, reporting, and verification while aligning them with the revised ETS. The subsidiarity grid serves as a formal justification required under EU law to demonstrate that the proposed measures cannot be sufficiently achieved by Member States alone.
EU producers and maritime operators face continued compliance with a harmonised carbon price, avoiding the complexity of multiple national schemes but also limiting flexibility to opt for less stringent domestic regimes. EU consumers may benefit from a level playing field that prevents carbon leakage, though costs of decarbonisation could be passed through. National authorities retain some discretion in transposing the directive but must adhere to centrally set benchmark values. Environmental NGOs may welcome the ambition aligned with the 2040 target, while industry groups might question the pace of cost increases.
The proposals now pass to the European Parliament and the Council for negotiation under the ordinary legislative procedure. The subsidiarity grid will be scrutinised by national parliaments under the early warning mechanism, which can trigger a yellow card if one-third of chambers object on subsidiarity grounds.