The European Union has proposed relaxing its carbon emissions trading system (ETS) for businesses, giving industries more time to reduce their carbon output than originally planned. The move, announced by the European Commission, softens a key climate policy tool and comes after criticism from member states such as Italy, which has argued the scheme functions as a de facto tax that has kept energy prices artificially high.

Under the changes, some industries could receive free emission allowances until 2038 rather than 2034, provided they commit to decarbonisation investment, with 80% of permits issued upfront and the remainder released once investments are made. The Commission also plans to slow the annual reduction in the emissions cap, from the current 4.3% to around 3.7% from 2031 and 1.7% from 2036. The proposals, which still require approval from EU states and lawmakers and could take a year to pass, drew a mixed response: Poland's climate minister welcomed the softened approach and vowed to push for further concessions, while Green politicians warned it risked worsening climate pollution, against a backdrop of record-breaking heat across Europe this year.