On 17 July 2026, the European Commission published a proposal to review and modernise the EU Emissions Trading System (ETS), the EU’s main carbon market mechanism. The proposal is intended to ensure that the ETS continues to support Europe’s competitiveness, industrial decarbonisation and energy independence while responding to changing geopolitical and economic conditions. Read more about the EU ETS here.

The Commission highlighted the ETS’s track record since its launch in 2005. The system has generated more than €270 billion in revenues, which have been reinvested in innovation, industrial decarbonisation and the modernisation of Europe’s energy system. At the same time, emissions from sectors covered by the ETS have been reduced by 50%, demonstrating the role of carbon pricing in driving emissions reductions across the EU economy.

The review aims to ensure that the ETS remains an effective tool for supporting investment and innovation during the clean transition. The Commission states that while climate action remains a priority, Europe’s industry is operating in a more challenging environment and requires a carbon market framework that continues to incentivise decarbonisation while strengthening competitiveness.