On 17 July 2026, the European Commission published a proposal to amend Directive 2003/87/EC, increasing free allocation levels for the heat and fuel benchmarks under the EU Emissions Trading System for the 2026-2030 period. The proposal makes available approximately 80 million additional allowances for these fallback benchmarks, while ensuring that the cross-sectoral correction factor under Article 10a(5) is not triggered.
The adjustment applies a revised maximum annual update rate to fully utilise the additional allowances. For 2027, 40% of the additional amount is applied, with the remainder phased in for 2028-2030. The minimum update rate, reference periods, datasets, and overall methodology remain unchanged. However, the adjustment explicitly excludes installations carrying out oil and gas activities under NACE codes 0610, 0620, 1920, and 4950, which will retain the existing maximum update rate.
The Commission states that the proposal is a targeted measure to protect carbon-leakage-vulnerable sectors by increasing free allocation without negatively affecting product benchmarks or requiring additional data collection or administrative resources. The regulation will enter into force on the third day after publication in the Official Journal, and the Commission will implement the changes through an amending Implementing Regulation and Decision.
The proposal now passes to the European Parliament and the Council for consideration under the ordinary legislative procedure. Stakeholders likely to be affected include EU ETS installations in energy-intensive sectors relying on heat and fuel benchmarks, which will benefit from higher free allocations, reducing their carbon costs. Oil and gas sector installations are excluded from the adjustment, maintaining their current allocation levels. EU taxpayers and consumers may see indirect effects through potentially lower carbon costs for covered industries, while environmental groups may question the impact on emissions reduction incentives. The Commission expects no additional administrative burden for national authorities or installations.