A Robust ETS for a Competitive and Decarbonised EU – CLG Europe View on the EU ETS Post-2030 Reform

26 May 2026 - CLG Europe calls for the reinforcement of the EU Emissions Trading System (ETS), as a strong, cost-effective, predictable and long-term investment framework that drives power and industrial decarbonisation, innovation and European competitiveness.

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Read the full position here

As the European Union is working on its the post-2030 framework, Europe faces a defining moment for its industrial and economic future. In this context, the review of the EU ETS comes at a time of growing geopolitical uncertainty, accelerating global competition for clean technologies and investment, persistent volatility of energy prices, and rising pressure on the EU’s industrial base. At the same time, businesses across Europe are already investing in electrification, renewable and low-carbon energy, industrial innovation and clean production pathways: these investments that depend on long-term policy certainty and credible market signals.

The EU ETS remains one of Europe’s most effective tools to drive industrial decarbonisation, strengthen energy security and enhance Europe’s competitiveness. A strong, stable and predictable ETS can accelerate private investment, support innovation, reduce dependence on imported fossil fuels and help build a more resilient and competitive European economy. Weakening the system through short-term political interventions or unpredictable adjustments would risk undermining investment confidence and slowing down the transition to clean industry.

CLG Europe position on the post-2030 EU ETS revision:

CLG Europe calls for an EU ETS reform that preserves the integrity and credibility of the system while strengthening the broader enabling framework needed for industrial transformation, including electrification, clean infrastructure, affordable low-carbon energy transition and strategic use of ETS revenues.

CLG Europe calls for:

  • Reinforcing the EU ETS as a strong, predictable and long-term investment framework that drives industrial decarbonisation, innovation and European competitiveness.
  • Preserving a credible and stable carbon price signal through a robust cap trajectory and Linear Reduction Factor (LRF). CLG Europe opposes political weakening of the ETS cap or short-term adjustments that would undermine investment certainty, carbon scarcity and long-term climate ambition. The ETS cap trajectory should remain aligned with the EU’s 2040 climate and energy objectives while preserving the environmental integrity and credibility of the system. At the same time, the review should carefully assess the interaction between the cap trajectory, allowance banking (TNAC), the Market Stability Reserve (MSR) and the potential role of permanent domestic carbon removals, particularly in relation to residual emissions in hard-to-abate sectors beyond 2040.
  • Maintaining a strong and rules-based Market Stability Reserve (MSR) that supports market stability, predictability and investor confidence in a structurally tightening carbon market post-2030.
  • Keeping the agreed phase-out of free allowances for CBAM sectors on track while ensuring a credible transition towards full carbon pricing. CLG Europe considers the transition from free allocation to the Carbon Border Adjustment Mechanism (CBAM) essential to restoring the full carbon price signal and supporting industrial decarbonisation. The phase-out of free allocations for CBAM sectors agreed under the Fit for 55 package should therefore not be delayed or weakened, as this would automatically slow down the phase-in of CBAM and weaken incentives for low-emission industrial products.
  • Accelerating investments in industrial electrification, grids, clean infrastructure and breakthrough technologies to enable industrial decarbonisation and strengthen Europe’s industrial resilience.
  • Keeping international credits outside ETS compliance, while ensuring the ETS continues to function primarily as a domestic decarbonisation and investment instrument for Europe.
  • Allowing only a limited and carefully regulated role for permanent carbon removals to address residual emissions in hard-to-abate sectors, under strict safeguards and robust certification standards.
  • Using ETS revenues more strategically and systematically to support industrial decarbonisation, industrial electrification, clean technologies, enabling infrastructure and private investment mobilisation across the EU.
  • Strengthening coordination between EU and national financing instruments, including the Innovation Fund, the proposed Industrial Decarbonisation Bank and the European Investment Bank, to crowd in private capital and reduce investment risk.
  • Supporting enhanced international cooperation on carbon pricing, including exploring closer alignment and potential linking between compatible emissions trading systems such as the EU ETS and UK ETS

A well-functioning EU ETS goes far beyond a mere climate instrument, it is a strategic economic tool for Europe’s future. As the EU enters a crucial phase for its industrial transformation, the ETS must continue providing the long-term predictability and investment certainty needed to scale clean technologies, accelerate electrification and strengthen EU’s industrial resilience and competitiveness. The upcoming reform, as part of the EU post-2030 framework, should therefore focus on reinforcing the effectiveness, credibility and stability of the system, while ensuring that ETS revenues, CBAM and the other related policies work together to create the conditions for a competitive, investable and decarbonised European economy.