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: 

 

  • 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 our EU ETS response 

Read our Innovation Fund response 

8 July 2025

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