The update of the benchmarks represents a key step in determining the level of free allocation of emission rights for the European industry. With the proposed values, the industry will continue to receive, on average, a free allocation that will cover approximately 75% of its emissions. The Commission notes that it is addressing the concerns of the industrial sector by making full use of available legal flexibilities. To incentivize industrial electrification, the updated approach maintains coverage of the indirect emissions arising from electricity consumption in 14 product benchmarks, resulting in higher reference values with an estimated financial impact of around 4 billion euros for the 2026-2030 period.
The update, required by the ETS Directive, complements the amendment proposed on April 1 to the Market Stability Reserve (MSR) of the EU ETS, which will better adapt and equip the reserve to respond to future market developments, including a potential supply shortage in the coming decades. According to the Commission, both measures will help support competitiveness and decarbonization of the European industry, while strengthening the stability and predictability of the EU carbon market.
These measures are framed in the broader context of the review of the EU ETS scheduled for July 2026, whose aim is to ensure that the system remains fit for the future and continues to support the European industry in its transition towards decarbonization.
Within the current EU ETS, the free allocation of rights is calculated sector by sector based on the performance of the top 10% of the most efficient producers. All companies receive a level of free rights, but those that emit above the benchmark established by the cleaner producers must acquire additional rights to cover those emissions. In this way, the ETS benchmarks reward the most efficient facilities and ensure that the free allocation provides a strong incentive for industries leading the transition.
