What is the main reason the European Commission is proposing an overhaul of the EU ETS?

The EU ETS is being revised because, if left unchanged, the system would run out of CO2 permits by 2039 — a trajectory incompatible with the EU’s long-term climate goals, including its 2040 target to cut net emissions by 90%.

How has the EU ETS performed in reducing emissions since its launch in 2005?

CO2 emissions from sectors covered by the EU ETS have halved since 2005, with most reductions coming from the power sector due to the CO2 price making renewables and gas more profitable than coal; however, heavy industry emissions barely decreased until the 2020s, and some firms attribute recent cuts to plant closures and deindustrialisation rather than effective decarbonisation driven by the ETS.

EU Commission Proposes Overhaul of Emissions Trading System

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The European Commission plans to overhaul the EU Emissions Trading System to meet 2040 climate goals, significantly impacting industrial sectors like chemicals and steel through revised permit rules and pricing mechanisms.

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