Brussels is preparing a redesign of the European Union carbon market, the bloc's most important climate change policy, which forces power plants and industries to buy permits when they emit planet-heating carbon dioxide.
The Commission's proposal for the revision, due after summer, will decide whether to continue the EU's existing system of giving industries some free CO2 permits, to help them compete with foreign firms that don't pay for their pollution. "We are looking at what is the best way to protect against carbon leakage, and we are looking at all the options," Kurt Vandenberghe, head of the Commission’s climate department, told reporters on the sidelines of an event in Brussels. "Carbon leakage" refers to the risk that industries would relocate outside of Europe to avoid its stringent climate regulations.
Vandenberghe was responding to a report in German newspaper Handelsblatt earlier this week, which said the EU planned to extend industries' free permits for years, citing unnamed EU officials. “We have never said this," Vandenberghe said. “We are looking at all the options.”
Launched in 2005, the EU carbon market is currently designed to meet the EU's 2030 emissions-cutting target. The revision will redesign the system to put industries on track for the EU's 2040 climate goal, to cut domestic emissions by 85%. “It is not fit for 2040, so that's why we need to revise it," Vandenberghe said, of the carbon market. "So that means that we have to look again at how we go cost-efficiently to 2040... to make sure that it drives investment and innovation."
(Reuters, February 05, 2026)