European Commission has announced that it has proposed updated benchmark values under the European Union Emissions Trading System (EU ETS) for the 2026-2030 period.
The proposal is expected to be formally adopted through an implementing act by the end of June following a four-week public consultation and review by member states within the Climate Change Committee.
Proposal aimed at supporting competitiveness and decarbonization
According to the Commission, the revised methodology is intended to support both industrial competitiveness and decarbonization while reinforcing stability and predictability within the EU carbon market. The Commission also emphasized that the revised framework should be implemented as early as possible to support industries most affected by the transition.
The Commission confirmed that the broader review of the EU ETS planned for July 2026 will assess whether the system remains suitable for supporting Europe’s industrial transition. The review is expected to examine the effectiveness of the ETS in balancing climate objectives with industrial competitiveness.
Indirect electricity emissions remain included
Under the updated methodology, indirect emissions linked to electricity consumption will continue to be included across 14 product benchmarks.
The Commission stated that this adjustment is intended to support industrial electrification efforts and results in higher benchmark values. According to the proposal, the financial impact of this measure is estimated at around €4 billion during the 2026-2030 period.
Free allocation system remains central
The benchmark update plays a key role in determining the volume of free emissions allowances allocated to industrial producers. The Commission stated that the proposed benchmarks would allow companies to continue receiving free allocations covering approximately 75 percent of emissions on average.
The revised benchmark values are based on greenhouse gas efficiency data submitted by installations for 2021 and 2022. The calculation methodology takes into account the performance of the cleanest 10 percent of installations in each industrial sector. Under the EU ETS framework, companies whose emissions exceed benchmark levels must purchase additional allowances, while more efficient installations benefit from higher free allocation levels.
Steel sector benchmark definitions revised
One of the major revisions concerns product definitions. The sintered ore benchmark has been expanded to include alternative agglomerated iron ore products, while hydrogen produced through water electrolysis has been included within the hydrogen and ammonia benchmark scope.
A significant steel-sector adjustment relates to the hot metal benchmark. Delegated Regulation (EU) 2024/873 expanded the hot metal benchmark definition to include steel production using direct reduction technology. However, the Commission clarified that direct-reduction-based steel production covered under the hot metal benchmark will not be included when calculating average greenhouse gas efficiency for determining revised benchmark values for 2026-2030.
As part of the upcoming ETS review, the Commission also plans to introduce sector-specific fallback benchmarks in response to industry requests. These benchmarks would be developed using dedicated methodologies tailored to individual industrial sectors.
