The European Commission has unveiled a revised Emissions Trading System (ETS) that significantly weakens the EU's flagship carbon-pricing mechanism, allowing industry to continue emitting greenhouse gases well into the 2040s instead of reaching zero by 2039 as originally planned. The move, likely to be seen as a concession to industry amid economic and geopolitical pressures, has drawn criticism from environmental groups who question how the bloc can still meet its legally binding 2040 climate target.

The key change lies in the "linear reduction factor", which sets how quickly pollution caps fall each year: this will drop from a planned 4.4% annually between 2031 and 2035 to just 3.7%, and further to 1.7% after 2036. The Commission is also extending free carbon allowances for industries covered by the carbon border tax until 2038, and from 2036 will let firms buy carbon offsets from outside the EU, potentially driving down offset prices and enabling more pollution. Alongside this, the Commission published an Electrification Action Plan aimed at speeding the shift to green energy, which the WWF welcomed but warned must be paired with strong renewables and efficiency targets to actually deliver decarbonisation.