EU States Back Extra Free CO2 Permits for Heavy Industry
EU countries backed a plan to grant heavy industries 121 million extra free CO2 permits over 2026-2030, a move that could save companies about €8.25 billion in carbon costs.
European Union member states have thrown their weight behind a proposal to grant heavy industries a larger share of free carbon dioxide permits in the coming years, a step aimed at shielding struggling manufacturers from rising emissions costs while they work to stay competitive.
The plan, put forward by the European Commission, would add 121 million free CO2 permits to the allocation for the 2026-2030 period, calculated on the basis of companies' heat production and fuel use. The Council of the EU confirmed the backing in a statement.
Based on the additional allowances, companies could avoid roughly €8.25 billion (about $9.52 billion) in carbon costs, according to calculations. The volume of free permits on offer exceeds what the Commission had initially proposed.
Chemical producers, metals processing firms, and makers of ceramics and glass are among the sectors set to benefit.
The free permits sit within the EU's Emissions Trading System, under which heavy industry must purchase allowances to cover its CO2 output — a mechanism designed to push emitters toward lower-carbon operations. A separate pool of free allowances exists to help European companies compete with foreign rivals that do not face comparable emissions charges.
The latest proposal would temporarily enlarge that free pool, even though the ETS is structured to phase down free allocation over time so that overall emissions keep falling.
Member states will now negotiate the final rules — referred to in EU terminology as the ETS "fall-back benchmarks" — with the European Parliament. Talks are being fast-tracked with the aim of sealing a deal before the end of the year.
In parallel, the bloc is working on a broader overhaul of the ETS, with a deal targeted for 2027.