An ETS that works for businesses and the climate

18 September 2026 - This position by CLG Europe examines the European Commission’s 2026 review proposal for the EU Emissions Trading System (ETS). It supports the proposal’s stronger focus on investment in industrial decarbonisation while calling for safeguards to maintain a strong and predictable carbon-price signal. The position sets out recommendations to protect the integrity of the ETS, strengthen the investment framework, and support industrial competitiveness through electrification and innovation.

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On 17 July 2026, the European Commission published its review proposal for the EU Emissions Trading System (ETS). CLG Europe supports the market-based approach of the ETS and the increased focus on its role in incentivising investment in large-scale decarbonisation projects to achieve Europe's 2040 climate target. At the same time, it calls for amendments to ensure that the revision maintains a strong and predictable carbon-price signal, rewards companies that have already invested in decarbonisation, and provides a stable framework for industrial transformation and private investment. 

The position welcomes several elements of the Commission proposal, including the strengthening of the investment architecture through the Industrial Decarbonisation Bank and the ETS Investment Booster, the more strategic use of auction revenues, the stronger link between free allocation and decarbonisation investments, and the preservation of rules-based ETS governance. However, it raises concerns that the combined effect of changes to the cap trajectory, the Market Stability Reserve, international credits, carbon removals and free allocation could weaken the carbon-price signal and reduce investment certainty. 

CLG Europe calls on the European Parliament and Member States to secure three outcomes in the legislative process: maintain the carbon-price signal and protect the integrity of the ETS; turn ETS revenues into a real investment engine for industrial transformation; and build competitiveness through investment, electrification and innovation. The position emphasises that a strong ETS, combined with targeted investment in electrification, infrastructure and industrial decarbonisation, remains the best route to a competitive, resilient and decarbonised European economy.