The European Commission is considering extending free quotas

As part of the upcoming review of the European carbon market (EU ETS), expected in the third quarter of 2026, the European Commission is working on the best way to protect European industry from carbon leakage. The review could lead to a revision of the trajectory for reducing free allowances, which were initially set to disappear following the entry into force of the carbon border adjustment mechanism. Under the current rules, free allowance allocations for sectors covered by the CBAM are set to be gradually reduced from 2026 onwards, with a view to phasing them out completely by 2034. The number of free allowances is expected to be almost halved in 2030 compared to 2025.