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.
Regarding the next steps, the reference values for 2026-2030 will be adopted through an implementing act. Following the four-week public consultation and examination by Member States in the Climate Change Committee, the Commission will adopt the benchmarks before the end of June. This act is necessary to proceed with the free allocation of rights to the industry, which is anticipated shortly after its adoption.
By July 2026, the Commission will review the EU ETS in order to modernize the system. In response to the concerns raised by the industry and the most affected sectors, it will propose the introduction of specific sector reserve benchmarks as part of the upcoming review, through a specific enabling provision allowing the Commission to define such sector benchmarks and establish a methodology for determining their values. The revised methodology should be applicable as soon as possible to provide timely and effective support to the affected sectors.
In March 2026, the President of the Commission, Ursula von der Leyen, announced an investment mechanism linked to the ETS (ETS investment booster) endowed with a budget of 30 billion euros, financed through 400 million emission rights, aimed at financing decarbonization projects. In its design, the Commission will build on the experience gained from the industrial heat decarbonization auction, facilitating access for small and medium-sized enterprises and targeting specific industrial processes where tailored decarbonization pathways are needed.
The benchmarks of the EU ETS are calculated based on the performance of the most efficient installations and are updated periodically to reflect technological progress. The revised values are derived from the data submitted by Member States in 2024 as part of the National Implementation Measures (NIMs) process and evaluated by the Commission.