What the draft would change
Peter Liese, the Parliament's point person on the carbon market overhaul, is set to propose trimming the Emissions Trading System cap by 3.4% each year in the early 2030s, versus the European Commission's 3.7% for that stretch. For the later part of the decade, the draft would set the Linear Reduction Factor at 2.3% a year, compared with the Commission's push for 1.7% from 2036 onward. The report is due to be unveiled Friday.
That draft will anchor the Parliament's stance for ETS negotiations. Meanwhile, EU governments are preparing their own changes to the Commission's July package.
Why this matters for industry
The softer front‑loaded cuts are intended to make the start of next decade less punishing for Europe's heavy emitters. Companies, including in chemicals, say the expense of complying with cuts is undercutting their ability to compete with rivals in the US and China, raising the risk of shutdowns.
Other notable features
The proposal would start counting carbon dioxide removals in 2029 and let biochar-based approaches account for up to 20% of credits. It would also add a mechanism to help prevent outsized price swings in the carbon market, lengthen the phase‑in of the EU's Carbon Border Adjustment Mechanism, and slow the timetable for phasing out free CO2 allocations for companies subject to the levy. Liese was not immediately available to comment.
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What this could mean for your portfolio
A gentler early path for emissions cuts, more flexible credit supply, and a guardrail against big price swings can all shift carbon costs for European manufacturers. If you own names exposed to ETS prices or trade flows covered by the border levy, keep an eye on how Parliament and member states shape the final rulebook from the Commission's July proposal.
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