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August 9, 2026

Newsletter

The European Post

Policy • Diplomacy • Strategic Insight

LATEST
New EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before AntalyaNew EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before Antalya

Carbon Prices Climb As The EU Readies A Sweeping ETS Overhaul

Albrecht Rogowski
Senior Correspondent

Antwerp: The price of polluting in Europe is rising again. EU carbon allowances recently traded around 77 euros, their highest since April, a quiet signal that the bloc’s emissions trading system is tightening just as Brussels prepares its most significant revision of the scheme in years.

The Commission is expected to publish its ETS revision proposal in July, and the agenda is wide. Officials are weighing changes to free allocation rules, the long-debated question of how to fold permanent carbon removals into the market, and a broader simplification of a system that has grown dense with exemptions and adjustments. Adoption is targeted for early 2027 under an accelerated timetable, a sign of how central carbon pricing has become to the bloc’s industrial and climate strategy.

Running in parallel is the move to the definitive phase of the Carbon Border Adjustment Mechanism, the levy designed to stop carbon-intensive production simply migrating outside the bloc. The rules have been softened at the edges to ease the transition. A new mass-based threshold exempts importers bringing in fifty tonnes or less of covered goods a year, which the Commission says spares roughly 90 percent of importers while still capturing 99 percent of the embedded emissions. The first surrender of CBAM certificates, for 2.5 percent of relevant 2026 emissions, is due by the end of September 2027, with the start of certificate sales pushed back to February 2027.

The Commission is also conducting a wider assessment of where the ETS should reach next, examining whether to bring municipal waste and additional maritime activity into scope, how to treat sectors outside CBAM that still face carbon leakage risk, and the criteria for linking the EU system with others such as the United Kingdom’s.

The politics are delicate. A higher and more predictable carbon price is exactly what economists say is needed to drive investment in clean technology, and supporters argue the ETS has quietly become one of the bloc’s most effective climate tools while raising revenue for the transition. Heavy industry, already squeezed by energy costs and global competition, warns that rising allowance prices plus an untested border levy could push production and jobs abroad rather than cut emissions, the very leakage CBAM is meant to prevent.

That is the balance the July proposal must strike. Integrating carbon removals could expand the pool of compliance options and reward technologies that pull carbon from the air, but critics fear it risks diluting the incentive to cut emissions at the source if the accounting is loose. Reforming free allocation, meanwhile, pits the credibility of the price signal against the survival of exposed industries during a fragile economic moment.

Why it matters is that the ETS is no longer a niche market for traders. It shapes the cost of steel, cement, power and shipping, feeds into consumer prices and funds a large share of Europe’s decarbonisation spending. The decisions taken over the next year will determine whether the system tightens credibly toward the bloc’s climate targets or buckles under the weight of its own exemptions. With prices firming and the proposal weeks away, the argument over who pays for Europe’s carbon is about to get louder.

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