EU Emissions Trading System (EU ETS) - Climate Action - European Commission

On 17 July 2026, the European Commission proposed a targeted revision of the EU Emissions Trading System (EU ETS) to strengthen Europe's industrial competitiveness and support the delivery of the EU's 2040 climate target.
The pages below will be updated shortly with detailed information on the proposed reforms.
Relevant links:
Press release
ETS Directive proposal + Annexes
Impact assessment on the ETS Directive (including ETS maritime & aviation) + Executive summary
Regulation proposal - Monitoring, Reporting and Verification (MRV) of maritime emissions + Annex
Regulation proposal - Revised values for ETS heat and fuel benchmarks
Innovation Fund evaluation - Staff Working Document + Executive summary + Supporting study
Modernisation Fund evaluation - Staff Working Document + Executive summary + Supporting study (Case study 1 + Case study 2 + Case study 3)

About the EU ETS

Learn more about the basics of the EU ETS and its functioning.

Scope of the EU ETS

What countries, sectors and gases does the EU ETS cover?

What are ETS revenues used for?

Explore how ETS revenues are used across the EU.

EU ETS emissions cap

Limiting emissions year after year.

Market Stability Reserve

Improving our resilience to major shocks.

Auctioning of allowances

Putting into practice the ‘polluter pays’ principle.

Free allocation

Mitigating the risk of carbon leakage.

Monitoring, reporting and verification

Ensuring transparent and accurate emissions trading under the EU ETS.

Keeping track of ownership of allowances.

Use of international credits

Financial instruments that represent a tonne of CO₂ removed or reduced from the atmosphere.

International carbon market

Emissions trading systems around the world.

International carbon pricing and markets diplomacy

Supporting partner countries to develop effective carbon pricing policies and robust approaches to international carbon markets.

Ensuring the integrity of the European carbon market

Preventing market abuse and misconduct.

Development of EU ETS (2005-2020)

Set up in 2005, the EU ETS is the world’s first international emissions trading system. It is now in its fourth phase (2021-2030).

This page was last updated on 7 August 2025