The European Commission proposed lowering the ETS linear reduction factor to
3.1% for 2031–35 and 1.7% from 2036 onward, down from the current 4.3%. It would
cut the Market Stability Reserve intake rate to 12% after 2030 (vs. 24% now),
allow international carbon offset credits to cover 2% of emissions reductions by
ETS-covered sectors, add 250 million tons of domestic carbon removals into the
ETS, and frontload 80% of free allowances to industry with the remaining 20%
issued only after verified decarbonisation investments.
