The European Commission has been running a public consultation and call for evidence on the design of the EU ETS and the Innovation Fund. Both are open until 8 July 2025. Questions include the treatment of aviation, shipping, indirect cost compensation, the CBAM, extension to municipal waste, carbon removals and carbon utilisation.
Our main messages:
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Simplify the EU ETS by phasing out free allocation
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Aviation: put a seat belt on EUA supply
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Free allocation: switch from process to products
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Link indirect cost compensation to carbon-free electricity only
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Reform the Innovation Fund to:
– Better assess the carbon footprint of electricity use
– Reserve grants to technology risk
– Reserve scale-up subsidies to poorly capitalised sectors -
Market Stability Reserve: reduce the reinjection rate as well as thresholds
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Keep carbon removals out of the ETS
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Do not shift CCU carbon accounting down value chains
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Limit linking with other ETS
Read our EU ETS response
Read our Innovation Fund response
8 July 2025
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