The European Commission plans to maintain the same number of free allocations under the EU Emissions Trading System for steel producers and refiners for the 2026-2030 period, according to a leaked presentation seen by Platts, part of S&P Global Energy.
These preliminary benchmarks, circulating ahead of an informal EU leaders summit on the bloc’s industrial competitiveness in Cyprus on Feb. 12, show a less aggressive reduction in free allocations of EU Allowances for most chemicals and cement facilities. Glass and ceramics producers, however, face tighter allocations, while those for steel and refining remain stable.
These sectoral benchmarks determine the share of free EU ETS permits allocated to industrial facilities based on their emissions intensity relative to the most efficient producers.
Free allocations are based on benchmarks derived from the average greenhouse gas emissions of the 10% most efficient installations covered by the EU ETS for that product.
The European Commission is expected to adopt implementing regulations in April 2026 that will update these benchmark values under Article 10a(2) of the EU ETS Directive.
A spokesperson at the European Commission declined to comment on the leaked preliminary benchmarks.
Industry reaction
“Several steel clients I spoke with were comfortable with the outcome, noting a clear preference for the benchmark to remain unchanged,” said Dan Maleski, a senior environmental markets consultant and CBAM lead at Redshaw Advisors.
“Softer benchmarks for cement and chemicals are unsurprising. These sectors are among the hardest to abate, with limited technological options and high costs. Many cement clients are already heavily reliant on government support to continue abatement efforts, so any potential relief in this area is being welcomed,” Maleski said.
The development comes as the European Commission reassesses free allocation rules under the EU ETS, which currently require a complete phaseout by 2034 for sectors covered by the EU’s Carbon Border Adjustment Mechanism. Calls have been made for extensions amid faltering competitiveness and concerns about carbon leakage.
“As regards free allocation, the ETS has always provided effective protection against the risk of carbon leakage and will continue to do so beyond 2030,” a Commission spokesperson told Platts on February 10. “The 2026 ETS Revision will assess various ways of providing this protection while supporting the industry in its decarbonization.”
EU carbon prices have slid sharply in recent weeks on news that the European Commission is looking to tweak free allocations and allowance supply caps.
EU Allowances were trading at Eur77.87/mtCO2e ($92.56/mtCO2e) at 1459 GMT on Feb. 11, the lowest in five months, according to the Intercontinental Exchange.
