Bellona co-signed an open letter by NGOs and industry asking for the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) to work for the climate and support industrial transformation.

The letter suggests two key ways to achieve this:

• Phasing out free ETS allowances as soon as possible

Support the introduction of a fully operational CBAM as of 2026, and a progressive reduction of free ETS allowances to CBAM sectors. Free ETS allowances should be reduced 10% annually between 2026 and 2030, and fully discontinued by 2032 at the latest.

•  Better and timebound targeting of free ETS allowances

Make the allocation of free ETS allowances conditional on energy efficiency requirements and decarbonisation plans. Also ensure a revision of the current ETS benchmarks that takes into account material substitution and circularity, and reflects the real technological developments and potential of sectors, making sure that installations investing in partially or fully decarbonised processes are included in the same benchmarks as the conventional installations. This means revising the definition and scope of the benchmarks and increasing the minimum improvement rate to at least 0.4%.

Read the full letter here.