The European Commission has published its long-awaited review of the EU Emissions Trading System (EU ETS), marking the start of negotiations on one of the European Union’s key climate policy files. The package includes revisions to the ETS Directive, the Monitoring, Reporting, and Verification (MRV) Regulation, and the ETS benchmarks, alongside an Electrification Action Plan aimed at supporting Europe’s transition towards a more electrified energy system.
For sectors represented by the European Shippers’ Council (ESC), the review will have important implications for the future operating environment of European supply chains.
A central element of the proposal is the revision of the ETS emissions reduction pathway, which sets the pace at which the overall cap on emissions will decline. The Commission also proposes changes to the Market Stability Reserve (MSR), the mechanism responsible for adjusting the supply of allowances in the carbon market, with the objective of making the system more responsive as the ETS moves towards a tighter market.
The proposal to maintain free allocation for industry beyond 2030, while linking it more closely to investments in decarbonisation, will be closely followed by European businesses. For shippers, the competitiveness of European manufacturing remains a key factor in ensuring resilient supply chains and maintaining Europe’s position in global trade.
The continued development of the ETS for maritime and aviation will also remain an important area of attention. Changes to the carbon market framework may influence transport costs, investment decisions, and the long-term strategies of companies operating across international supply chains.
The accompanying Electrification Action Plan highlights the importance of access to affordable clean energy, infrastructure development, and digitalisation. These elements will be essential to enabling industry and transport sectors to adopt lower-emission solutions while maintaining economic competitiveness.
The proposals will now enter the legislative process in the European Parliament and the Council. As discussions progress, the balance between climate ambition, industrial competitiveness, and supply chain resilience will remain central to the debate.
ESC will continue to monitor the negotiations and engage with European institutions to ensure that the revised ETS provides a predictable framework that supports both the decarbonisation of transport and the competitiveness of European businesses.