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49 min ago 2 min read
The European Council and Parliament have reached a provisional agreement to increase free carbon allowances for energy-intensive industries, potentially reducing emissions costs for major industrial gas consumers.
Announced on 12 November, the agreement would make around 121 million free allowances available under the EU emissions trading system (ETS) between 2026 and 2030, equivalent to 121 million tonnes of carbon dioxide (CO2).
It builds on a European Commission proposal to make allowances available under existing ETS rules.
The measures target industries covered by the ETS heat and fuel benchmarks, covering chemicals, glass, ceramics, pulp and paper, and food and beverage processing.
These sectors represent significant consumers of industrial gases, including oxygen, nitrogen, hydrogen, and CO2.
Under the ETS, companies must surrender one allowance for each tonne of CO2 equivalent emitted. Free allowances reduce the volume businesses must purchase to comply with the system, without changing their overall emissions obligations.
While additional free allowances could ease operating costs, they could also weaken financial incentives to invest in decarbonisation projects, including low-carbon hydrogen and carbon capture.
However, Irish Climate Minister, Darragh O’Brien, argued the amendment would provide “predictability” for industry to clean up operations while “remaining competitive at home and retaining production within the EU.”
Negotiators agreed a further 28 million allowances previously unallocated because installations had not met certain ETS conditions, including energy efficiency audits or climate neutrality plans.
A further five million would be reserved through 2030 to support particularly exposed energy-intensive industries at risk of carbon leakage – where industrial production relocates to countries with less stringent emissions regulations.
Heat and fuel benchmarks, which account for approximately 25% of total free allocations, apply to industrial processes not covered by product-specific benchmarks.
The provisional agreement must now be endorsed and formally adopted by the Council and Parliament, after which the Commission will establish implementing rules governing the revised allocations.
