With France, Spain, and Germany joining the protests, the Commission might be unable to adopt the new benchmarks for free allocation in late June. If so, that means the 2026 handout of FA will be delayed.
During last week’s Competitiveness Council (28 May), may member states voiced strong concerns about the Commission’s 11 May proposal for updated ETS benchmarks, which reduces fuel and heat fallback benchmarks to the lowest level permitted by the EU ETS Directive.
Industry associations and an increasing number of member states have criticized the benchmarks that will greatly reduce free allocation levels, even though the methodology outlined in the central ETS legislation gives the Commission very little legal leeway in defining these values.
In last week’s policy comment, we mentioned a non-paper, signed by Greece, Poland, and Romania, that called for EU ETS benchmarks to be frozen at current levels. It has later emerged that France, Spain, Germany and Estonia also presented a non-paper (an earlier version, dated 22 May, lists only France and Spain).
The four countries warn that the Commission’s proposed fallback benchmarks are insufficient to prevent carbon leakage. They call on the Commission to present a targeted legal proposal to address the fallback approach and analyse the feasibility of retroactive application from 1 January 2026.
During the Council discussions, France’s deputy minister for industry said Paris was “very disappointed” with how the Commission calculated industry benchmarks and outlined how the ETS “can be improved.”
Commission Vice-President Séjourné, who attended the competitiveness council on behalf of the European Commission, told member states’ ministers that ETS benchmark concerns will be reviewed more broadly as part of the July ETS reform. This response reportedly satisfied the French minister, though other member states and industries continued to press for more immediate action.
Over the weekend, a coalition of 14 industry lobby groups (chemicals, steel, mining, glass, ceramics, aluminium) wrote to Commission President von der Leyen calling on the Commission to suspend the ETS fallback benchmark update until a methodology more reflective of industry reality is adopted. They argue current fallback benchmarks fail to account for individual installation conditions, resulting in unfairly low free allocation.
The feedback on the Commission Regulation on ETS benchmarks (a delegated act) to update free allocation for 2026–2030 closes on 8 June (the proposal was presented on 11 May).
The member states’ experts will then convene in the Climate Change Committee. 10 June has been circulated as the date for this. A CCC internal plan from 30 April suggests the plan is (was?) to adopt the delegated act in late June.
The recent protests from key member states make that timeline look unlikely. Continued pushback from EU capitals may serve to delay the 2026 handout of free allocation, which is already late compared to earlier cycles.
See more background in our take on the 11 May benchmarks announcement.
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