Assessing the 2026 Commission proposal for the EU ETS 1

This policy brief examines some of the implications of the amendments for the EU ETS proposed by the EU Commission in July 2026 and its role within the wider EU climate-policy architecture. It assesses the supply and demand balance, with particular attention to the revised cap trajectory, additional sources of allowance supply and the amended MSR rules. It also considers the implications for free allocation, the integration of permanent carbon removals, the potential use of international credits, and the interaction of these elements with the EU’s 2040 and 2050 climate objectives.