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DRAFT REPORT (COM(2026)0616 – C100188/2026 – 2026/0212(COD))

On the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC and Decision (EU) 2015/1814 as regards driving competitiveness and cost-effective decarbonisation

ENVI-PR-791996

Committee on the Environment, Climate and Food Safety · Rapporteur: Peter Liese

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This is the rapporteur's draft report on the Commission proposal to amend the EU emissions trading system (ETS) directive and the market stability reserve decision, with 83 amendments tabled. The amendments extend support for sustainable aviation and maritime fuels, prolong maritime derogations to 2040, and set a minimum of 10 million and 55 million allowances for renewable fuels of non-biological origin. They change the linear reduction factor to 3.4% from 2031 to 2035 and 2.3% from 2036, and allow 260 million allowances for international credits from 2036 to 2040. They integrate permanent carbon removals into the ETS through 250 million allowances, with biochar capped at 20%, and require Member States to spend at least 75% of auction revenues on decarbonisation. They make free allocation conditional on Invest in EU decarbonisation plans, phase in conditionality from 2031 to 2035, and give extra free allowances to the most efficient installations and to those investing at their site. They adjust the CBAM factor, create key performance indicators for carbon leakage, and make the market stability reserve react more swiftly to price changes.

Committee position. The rapporteur considers the Commission proposal essentially balanced and tables 83 amendments to extend support for sustainable fuels, adjust the linear reduction factor, integrate carbon removals, strengthen conditionality for free allocation, protect CBAM sectors and make the market stability reserve more responsive.

Key points

  1. Reserved allowances for sustainable aviation fuels are extended until 2040, with 50% of them reserved for renewable fuels of non-biological origin.
  2. A minimum of 10 million allowances and a minimum of 55 million allowances are to cover the price difference between fossil kerosene and renewable fuels of non-biological origin.
  3. 110 million allowances are reserved from 2028 to 2040 to cover part of the price difference between fossil fuels and sustainable maritime fuels, with a significant share for renewable fuels of non-biological origin.
  4. Maritime derogations for ice-class ships, outermost regions, small islands and public service routes are extended to 2040, with a phase-out schedule from 2034 to 2040.
  5. The linear reduction factor is set at 3.4% from 2031 to 2035 and 2.3% from 2036.
  6. 260 million allowances are made available for the purchase of 260 Mt of international credits from 2036 to 2040, with priority for projects with a high share of Union value.
  7. The Union-wide quantity of allowances is increased by 250 million to purchase permanent carbon removals, with biochar limited to 20% and a delegated act on biochar criteria by 31 December 2028.
  8. Member States must spend at least 75% of auction revenues on decarbonisation, including carbon contracts for difference, CBAM sectors, rail and restoration measures.
  9. Free allocation becomes conditional on an Invest in EU decarbonisation plan, phased in from 33% in 2031 to 100% in 2035, with 70% allocated on plan submission and 30% on verified construction start from 2036.
  10. The 10% most efficient installations receive a 10% increase in free allocation, and installations not in a pool receive a 2% increase.
  11. The CBAM factor is adjusted to 70% in 2030, 58% in 2031, 40% in 2032, 27% in 2033 and 15% from 2034 to 2037, with key performance indicators to adapt it per sector.
  12. The market stability reserve triggers on a 25% price change over three months against a one-year reference, releasing or placing 25 million allowances, adjusted by the linear factor.

Who is affected

  • Aviation and maritime operators, who get extended support for sustainable fuels and prolonged derogations.
  • Energy-intensive and CBAM sectors, which get adjusted CBAM factors, priority funding and extra free allowances.
  • ETS installations, which must submit Invest in EU decarbonisation plans to keep free allocation.
  • Member States, which must spend at least 75% of auction revenues on decarbonisation and report on enabling conditions.
  • Waste incineration operators, which face inclusion in the ETS from 2031 to 2034 with monitoring rules by 31 December 2028.

Figures and deadlines

  • 50% of aviation allowances reserved for renewable fuels of non-biological origin
  • 10 million allowances for the price difference for renewable fuels of non-biological origin
  • 55 million allowances for the price difference for renewable fuels of non-biological origin
  • 110 million allowances reserved for shipping companies from 1 January 2028 to 31 December 2040
  • linear factor of 3.4% from 2031 to 2035 and 2.3% from 2036
  • 260 million allowances for 260 Mt of international credits from 2036 to 2040
  • 250 million allowances to purchase permanent carbon removals, with biochar limited to 20%
  • at least 75% of auction revenues for decarbonisation

Legal basis: Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union