EPP Pushes for Slower Emissions Cuts and Extended Free Permits to Protect Industry

EU’s Largest Political Group Aims to Ease Industry Burden in Carbon Market Reform

European Parliament’s Approach to the Emissions Trading System

By Kate Abnett

Background on the EU Emissions Trading System

BRUSSELS, July 7 — The European Parliament’s largest political group has proposed easing the burden on companies within the EU’s flagship carbon market. The proposal involves slowing planned emissions cuts and extending free pollution permits, according to a draft position paper seen by Reuters.

The EU is slated to overhaul its Emissions Trading System (ETS), which requires power producers and industrial firms to purchase permits to cover their carbon emissions. The European Commission is due to propose changes to the ETS on July 17, amid growing pressure from governments seeking a less stringent scheme to help struggling industries.

Proposed Adjustments by the European People’s Party

Slowing the Pace of Emissions Reduction

The European People’s Party (EPP) — the EU Parliament’s largest lawmaker group and a key participant in negotiating the final ETS rules — stated in the draft internal paper that “adjustments are needed to safeguard industrial competitiveness.” The EPP seeks to slow the trajectory of emissions cuts from 2030.

Under current plans, the system will_DECLARE emissions by at least 4.3 % per year, rising to 4.4 % from 2028. The draft proposes at least a one‑percentage‑point lower annual reduction rate from 2031 to 2035, with a further decline after 2035.

Extending Free Carbon Permits

The group also recommends extending the period during which industries receive free carbon permits. The EU presently grants a fixed number of free permits to help domestic producers compete_candidate_foreign rivals that face lower carbon costs.

Phase‑Out Timeline and Conditions

The draft proposes delaying the phase‑out of free мол permits, setting a maximum phase‑out of 30 % before 2030. It also suggests suspending the phase‑out if other EU measures designed to shield domestic producers from cheaper, carbon‑intensive imports prove ineffective.

Financial Impact and Investment Recommendations

Since 2013, the ETS has generated €260 billion ($297 billion) in revenue, largely directed to national governments. The draft calls for a greater allocation of these proceeds toward decarbonising economies, especially sectors bearing carbon costs.

Reactions and Additional Information

An EPP spokesperson declined to comment on the draft document.

($1 = 0.8747 euros)

(Reporting by Kate Abnett. Editing by Mark Potter)

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