The EU ETS at a Crossroads

Jul 8, 2025 | Climate Financing, EU Emissions Trading System (ETS)

Read our EU ETS response

Read our Innovation Fund response

Our main messages:

  • Simplify the EU ETS by phasing out free allocation

  • Aviation: put a seat belt on EUA supply

  • Free allocation: switch from process to products

  • Link indirect cost compensation to carbon-free electricity only

  • 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

  • Keep carbon removals out of the ETS

  • Do not shift CCU carbon accounting down value chains

  • Limit linking with other ETS

Read our responses on the European Commission’s website: 

On the EU ETS
On the Innovation Fund

Read more on the EU ETS and climate financing