With the proposals, EU Climate Commissioner Wopke Hoekstra remains committed to the long-term climate goals. The emissions trading system remains the primary instrument to reduce air pollution by companies, although energy-intensive companies will receive ‘free emission allowances’ for a longer period. This additional leeway is intended to enable enterprises to finance the shift to cleaner production processes without further weakening their competitive position.
Electrification
By increasing the use of electricity in industry, transport, and buildings, expenditures on oil and gas imports could significantly decrease in the coming decades. To enable this transition, Brussels presents a broad action plan for electrification. This positions electrification not only as a climate measure but also as an economic strategy aimed at strengthening Europe’s energy security.
Support for European companies will not remain unconditional. Enterprises receiving free emission allowances for a longer period will be required to invest more explicitly in measures that reduce their emissions. Brussels aims to prevent this additional leeway from merely delaying the energy transition.
Promotion
The aviation sector will also face new regulations. The European Commission proposes expanding the ETS2 emissions trading system to international air traffic starting in 2029, focusing on a CO2 tax on flight routes of up to approximately 5,000 kilometers.
Climate and Industry
The proposals clarify that the Commission is increasingly linking climate policy with industrial policy. Emissions must be reduced further, but according to Brussels, this can only happen if companies are given sufficient room to make necessary investments and the shift to electricity progresses faster.
The plans will be subjects of intense political debate in the near future. It is already clear that about ten EU countries will try to form a blocking minority because they want more concessions for businesses. Conversely, several industrial nations believe the current EU environmental and climate rules must be upheld.
Supporters of the ETS expansion see the combination of climate measures and industrial support as a way to accelerate the energy transition without putting further pressure on the competitiveness of European companies. At the same time, there is criticism from organizations fearing that looser emission allowances could weaken the incentive to reduce emissions rapidly.