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The proposal to review the EU Emissions Trading System (EU ETS) comes at a pivotal moment for Europe’s climate, industrial and economic policy.
Since its launch in 2005, the EU ETS has become the EU’s flagship climate instrument, helping to reduce emissions from the power sector, industry, aviation and maritime transport while generating more than €230 billion in auction revenues.
Emissions from sectors covered by the EU ETS have fallen by around 50% compared with 2005 levels, demonstrating the effectiveness of a robust, declining emissions cap combined with carbon pricing.
Europe faces heightened geopolitical uncertainty, growing international competition in industry and clean technologies, persistently high energy prices in parts of the economy, and significant investment needs in electricity grids, electrification and industrial decarbonisation.
The recent devastating wildfires across Europe reiterate loud and clear the need for a strong EU ETS capable of assisting in preventing climate-related natural disasters.
At the same time, the EU continues to pay nearly €400 billion annually on imported fossil fuels, leaving the European economy exposed to international supply chokepoints and price shocks. A strong ETS acts as an energy independence instrument; keeping a robust price signal accelerates the shift to domestic clean energy.
A predictable and credible carbon market remains one of Europe’s greatest competitive advantages. Weakening the integrity of the EU ETS would not address the structural challenges facing European industry. On the contrary, greater regulatory uncertainty undermines long-term investment decisions, increases financing costs for capital-intensive low-carbon projects and slows the deployment of clean technologies essential for Europe’s competitiveness and energy security.
The post-2030 EU ETS should preserve the core principles that have made the system successful while adapting it to support Europe’s next phase of industrial and energy transformation. This means maintaining a strong and predictable emissions cap aligned with 2040 climate objectives while providing stability and flexibility for investment. It also demands ensuring that EU ETS revenues are used more strategically to accelerate investment in decarbonisation, electrification and clean technologies.
T&E’s slides explain what the ETS review means for transport.
Impact for the aviation sector
Scope: a half-hearted step towards pricing international flights.
Aviation is the EU’s fastest growing source of emissions, rising by more than 30% since 2005 — the start of the ETS — while emissions from other sectors have declined. A big amount of these emissions came from long-haul flights, the most polluting kinds of flights. However, to date long-haul emissions were not included in the ETS. That meant that over half of EU aviation emissions were escaping pricing. The new scope would cover all departing flights to airports within 5,000 km from Frankfurt airport.A Paris to Dubai flight is in the scope. A Paris to New York flight is not. The scope avoids Chinese and US airports, reducing the risk of geopolitical retaliation. The scope will bring competing hubs into the system — European carriers and airports no longer have to compete on an uneven playing field for routes to Dubai, Doha and Istanbul.
T&E accepts this proposal as a pragmatic first step that protects European interests. But Member States and the Parliament should support an ETS extension to all departing flights, as of 2028 (rather than 2029), given that CORSIA is not an effective mechanism to reduce aviation emissions.
How many emissions are covered under the proposal?
The 5,000 km scope covers ~59% of Europe’s departing aviation emissions, up from 44% today.- The increase in coverage will apply from 2029.
- SAF allowances will offset part of the increase, reducing the proportion of priced emissions to 57% in 2029. So nearly half of Europe’s aviation emissions still carry no carbon price and airlines get financial support for buying SAFs.
T&E accepts this proposal as a pragmatic first step that protects European interests. But Member States and the Parliament should support an ETS extension to all departing flights, as of 2028 (rather than 2029), given that CORSIA is not an effective mechanism to reduce aviation emissions.
Private jets, contrail allowances and more
The revision includes other key measures to curb aviation emissions, notably putting a price on the climate impact of private jets for the first time. Despite their disproportionate impact, private jets have largely been left exempt from the EU ETS until now.The non-CO2 impact of aviation is also finally receiving serious consideration. The Commission proposal introduces free allowances for airlines that successfully avoid creating warming contrails, making it a significant milestone in the race to reduce aviation’s full climate impact.
To learn more about these other key measures, please read the .
Download document: What does the 2026 ETS Commission proposal mean for transport
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