EU proposes slowing down cuts to carbon emissions for businesses

What the report says

BBC World News reports that the European Union has put forward proposals to ease the pace of emissions reductions required from businesses under its emissions trading system, or ETS. The plan, published on 17 July 2026, is part of a wider climate policy overhaul and would give some companies longer to cut their carbon output if they commit to decarbonisation investments.

The ETS, launched in 2005, is the EU’s central mechanism for limiting greenhouse gases from industry and power generation. It requires firms to hold allowances for each tonne of carbon dioxide they emit, while the overall supply of allowances is reduced over time. Under the new proposals, the annual reduction in the cap would slow to about 3.7% from 2031 and 1.7% from 2036, compared with the current 4.3% rate.

The European Commission also proposes extending free permits for some sectors until 2038, rather than ending them in 2034 as previously planned alongside the introduction of a carbon border charge. Companies with decarbonisation plans in Europe could receive 80% of free allowances in advance, with the rest provided after investments are completed. The Commission says the changes are intended to keep the system aligned with the EU’s target of cutting emissions by 90% by 2040 from 1990 levels.

The proposals still require approval from EU member states and lawmakers, a process the BBC says could take a year. EU climate commissioner Wopke Hoekstra described the shift as more business-friendly, while Poland’s climate minister Paulina Hennig-Kloska said Warsaw would seek further weakening. Green lawmaker Michael Bloss criticised the plans, warning they would increase climate pollution.