August 9, 2026

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The European Post

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August 9, 2026

Newsletter

The European Post

Policy • Diplomacy • Strategic Insight

LATEST
Japan Becomes Europe’s Closest Security Partner in AsiaCan Europe’s New Zealand Deal Anchor It in the Pacific?Chip Research Binds Europe and South Korea CloserMinimum Prices Replace Tariffs in Europe’s China Car DealBrussels and Beijing Keep Talking While the Trade Gap WidensKorean Weapons and EU Loans Now Bankroll Europe’s RearmamentNew 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 DecadesJapan Becomes Europe’s Closest Security Partner in AsiaCan Europe’s New Zealand Deal Anchor It in the Pacific?Chip Research Binds Europe and South Korea CloserMinimum Prices Replace Tariffs in Europe’s China Car DealBrussels and Beijing Keep Talking While the Trade Gap WidensKorean Weapons and EU Loans Now Bankroll Europe’s RearmamentNew 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 Decades

Carbon Market Reform Stretches Toward a 2040 Climate Target

Atli Samper
Policy Watch Editor, Energy and Climate

Duisburg: In Germany’s largest inland steel town, factory managers spent late July reading the fine print of the European Commission’s plan to remake the carbon market for the decade after 2030.

The Commission tabled its proposal to revise the EU Emissions Trading System on 17 July 2026. It sets the legal framework for the scheme’s fifth phase, running from 2031 to 2040, and ties the carbon market to the bloc’s goal of cutting net greenhouse gases by 90 percent from 1990 levels by 2040.

The system makes polluters pay for each tonne they emit, and it has become the financial engine behind Europe’s climate policy. Steelmakers in Duisburg live and die by the price of those allowances.

Brussels wants the reform to push money back toward industry. A new Industrial Decarbonisation Bank, an Investment Booster and continued support from the Innovation and Modernisation Funds would channel carbon revenues into cleaner furnaces and processes.

The plan also tightens the rules on the free allowances that heavy industry has long received, and it aligns the carbon market with the Carbon Border Adjustment Mechanism, which charges importers for the emissions baked into foreign steel, cement and fertiliser.

Aviation and shipping face firmer caps too. And in a move that will reach ordinary households indirectly, the Commission wants to fold municipal waste incineration into the trading system over time.

Environmental groups broadly welcomed the direction while pressing for fewer giveaways to polluters. Industry federations warned that steep carbon costs, without matching support, could drive production and jobs out of towns like Duisburg toward less regulated markets.

Lawmakers now face a long fight. The proposal heads to the European Parliament and the Council, where governments with heavy industry and coal legacies will bargain hard over the pace of change.

The Commission insists the design rewards firms that invest at home. Companies that decarbonise early would spend less on allowances and gain an edge as the cap tightens through the 2030s.

Full details of the scheme sit on the Commission’s climate action pages, which set out how the system works today and where the revision would take it.

For Duisburg’s blast furnaces, the stakes could hardly be higher. The carbon market that has squeezed their margins for years may soon decide whether green steel gets built on the Rhine or somewhere far beyond Europe’s borders.

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