The European Commission’s Emission Trading System (ETS) review proposal, published on 17 July 2026, sets the stage for a lengthy negotiation process on one of Europe’s most important climate policy tools.

This paper assesses the Commission’s proposal across the key elements that determine the ETS’s effectiveness, including free allocation and carbon leakage prevention, the Linear Reduction Factor (LRF), the Market Stability Reserve (MSR), the use of ETS revenues, international carbon credits, and the integration of permanent carbon removals. For each element, it sets out what the Commission proposes to change, the problematic aspects, and what Bellona Europa recommends instead to keep the ETS a strong and credible driver of industrial decarbonisation and competitiveness.

Read more in our new policy paper.

• Raising the bar: Bellona Europa’s assessment of the Commission’s ETS review proposal (pdf)