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Europe’s most effective tool to cut greenhouse gas emissions ‘risks being weakened’
The European Commission has proposed an overhaul of the EU's emissions trading system (ETS), widely regarded as Europe's most effective policy for cutting greenhouse gases, prompting criticism that the changes would water down its impact. The revised plan would give heavy industries a less demanding and cheaper path to emissions cuts, coming just as western Europe endures record-breaking heat and deadly wildfires in Spain that scientists say were made virtually impossible without climate change.
Under the proposals, some heavy industries would keep free pollution permits for longer and see the overall supply of permits reduced more slowly, easing pressure on companies after ten EU member states warned the scheme was pushing up energy costs and hurting competitiveness. The ETS, in place since 2005, is credited with cutting emissions by 47% by 2023 compared with 2005 levels, and the commission says it needs updating to meet the EU's target of a 90% reduction by 2040. The overhaul would also extend the scheme to municipal waste, to flights within 5,000km of Europe (affecting routes to north Africa and the Middle East but not the US or China), and to private jets for the first time. Climate commissioner Wopke Hoekstra defended the ETS as "a phenomenal asset" but said European industries needed protection from foreign rivals benefiting from state subsidies and weaker labour standards.
In short
- EU proposes softer emissions trading rules, easing pressure on heavy industry
- Comes amid record heat and deadly wildfires across Europe
- ETS to expand to waste, private jets and some international flights
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The modifications recognise that European industries face fundamentally unfair global competition, as their rivals benefit from lower environmental and labour standards whilst receiving state subsidies. Weakening the scheme slightly allows European manufacturers to remain competitive and prevents 'carbon leakage,' whereby strict rules simply shift production to countries with weaker standards—ultimately failing to reduce global emissions. The ETS has already delivered substantial cuts (47% since 2005); modest adjustments that preserve European industrial capacity are compatible with ambitious long-term targets whilst protecting jobs and economic security.
The case against
The proposals fundamentally undermine Europe's most effective climate tool at precisely the moment when climate impacts are intensifying—record heat and deadly wildfires are visible, present-day consequences. By granting free permits to heavy industries for longer and slowing permit reduction, the overhaul reduces the economic pressure driving genuine decarbonisation and allows continued pollution when the EU urgently needs to accelerate reductions to meet its 2040 target. Europe must lead decisively on climate; compromising now squanders the window to drive meaningful emissions reductions before climate damage deepens.
Explained simply
The European Union's emissions trading scheme limits greenhouse gas pollution from heavy industries. Companies that emit less than their allowance can sell spare permits to others that exceed theirs, creating a financial incentive to reduce emissions. Since 2005, this scheme has become one of Europe's main tools for tackling climate change.
The system has achieved a 47% reduction in emissions from covered industries since 2005. The EU now wants to make it stricter to meet its target of a 90% cut by 2040, particularly pressing given the record heat and wildfires western Europe has recently experienced, which scientists attribute to climate change.
However, the scheme is controversial. Heavy industries and some EU member states argue it raises energy costs and puts them at a competitive disadvantage against foreign rivals with less strict environmental rules. This tension between climate ambition and economic protection is central to Europe's ongoing climate debate.
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