EU Slows Carbon Emissions Quota Cuts from 2031, Extends Free Allowance Period to 2037

According to Bloomberg, the European Commission has approved a proposal to reform the EU Emissions Trading System (EU ETS) after 2030. The plan slows the annual reduction rate of carbon emission limits to 3.7% between 2031 and 2035, then further to 1.7% from 2036 onward. For industries covered by the Carbon Border Adjustment Mechanism (CBAM), the phase-out period for free carbon allowances will be extended to 2037.

Under the new framework, companies will receive 80% of free allowances upon submission of board-approved decarbonization investment plans, with the remaining 20% distributed after plan implementation.