EU ETS 2026 revision: what’s next?

This online debate examines the upcoming review of the EU Emissions Trading System (ETS) and its role in steering Europe towards climate neutrality.

The EU Emissions Trading System (EU ETS) is entering a decisive phase, as the European Commission is preparing the 2026 review of the EU ETS to address pending issues from its last revision and align the EU ETS with the newly adopted 2040 climate target. The Commission has been mandated to assess the integration of carbon removals, the expansion of the system’s scope, carbon leakage in sectors not covered by the Carbon Border Adjustment Mechanism (CBAM), the market stability reserve (MSR), the use of ETS revenues, and conditions for international linkages. The revision also offers a chance to address liquidity issues arising from the progressively declining cap (the so-called EU ETS endgame ).

Although taken for granted as the pillar of the EU’s climate policies, the EU ETS is standing at the top of the EU political agenda. Several countries and industrial actors have raised concerns over the economic risks of having high carbon costs. On 19 March, the European Council reaffirmed the essential role of the ETS in the climate and energy transition as a market-based price signal for carbon emissions that drives investment and innovation. The Council also invited the European Commission to include in the review to be published in July 2026 possible solutions to reduce the volatility of the carbon price and mitigate its impact on electricity prices, including related supply chain costs, and on diversion of activities.  

This FSR Online Debate will examine the key aspects the reform must address to ensure the necessary emission reductions. It will touch upon the opportunities and risks arising from relying on the market stability reserve, international credits, and free allocations. 

The LIFE NETS – Net-Zero Emissions Trading Systems project, co-financed by the EU Life Programme, aims to improve how ETSs can be designed and communicated to enhance credibility, transparency, and public trust, while remaining effective in delivering emission reductions.

The session will follow a moderated panel format, with introductory remarks from the chair, four interventions from the speakers, an open discussion between participants, and dedicated time for audience questions.

The debate will also introduce the first NETS training course on the functioning of the EU ETS, taking place in February 2027 at the EUI.