Commission ETS proposal reinforces backbone of Europe’s climate and industry strategy

• The European Commission published its proposal for the EU ETS review, giving stronger investment signals through conditional free allocation, greater reinvestment of ETS revenues, support for Carbon Contracts for Difference, and further integration of permanent carbon removals  

• CCSA welcomes the Commission’s proposal, which reflects several of the Association’s key recommendations for industrial decarbonisation  

• A strong and predictable EU ETS remains essential to scaling CCUS, supporting industry, and achieving Europe’s climate goals  
• Today, Member States reinvest an average of 5% of national ETS revenues into the decarbonisation for industries generating them. The proposal further mandates them to use increase this figure to create a coherent investment framework for the industrial transition to 50% of national ETS revenues  

Brussels, 17 July – The European Commission has published today its proposal to revise the EU Emissions Trading System (EU ETS). The Carbon Capture and Storage Association (CCSA) recognises it as an important step towards strengthening Europe’s flagship climate instrument and providing greater certainty for industrial decarbonisation investments.  

In the lead up to this important revision, the CCSA has long advocated for the inclusion of key provisions to help strengthen the European industrial base in its decarbonisation efforts. Among these, a particularly welcome measure is the integration of Carbon Dioxide Removals (CDR) into the EU ETS. The integration, through a public procurement facility for certified domestic negative emissions, will create additional space for hard-to-abate sectors to support the uptake of the carbon removals industry. Making free allocation increasingly conditional on industrial investments within Europe is one of the key measures that can strengthen European industrial competitiveness, ensuring that free allocations translate into low-carbon expenditures.  Alongside the gradual reform of free allocation and the transition towards a Carbon Border Adjustment Mechanism (CBAM), linking carbon leakage protection to tangible decarbonisation investments will provide a more effective framework to stimulate investment in low-carbon technologies while protecting European industry from carbon leakage. 

While EU-level ETS revenues are already fully dedicated to decarbonisation, so far, only a limited share of the revenues retained by Member States has been channelled back into the industries driving Europe’s transition (an average of 5%). Hence, the provision for Member States to invest 50% of ETS revenues into the decarbonisation of the sectors that generate them is a key element of the proposal. Recycling carbon pricing revenues into industrial decarbonisation for key industrial clusters, including the development of CO₂ transport and storage infrastructure, has long been a priority for the CCSA and will be critical to accelerating investment, strengthening Europe’s industries, and creating a coherent investment framework for the industrial transition.  

The Industrial Decarbonisation Bank – with €100 billion funding for industrial decarbonisation – as well as the so-called ETS Investment Booster, funded with €30 billion for the period 2028-2030, have a crucial role to play in the next decade. By establishing a durable investment framework and providing long-term revenue certainty, and through instruments such as Carbon Contracts for Difference (CCfDs), the Bank will significantly contribute to de-risking the EU industrial CO2 value chain, enabling projects to reach Final Investment Decision. These measures send a strong signal that the EU recognises the need to pair a robust carbon price with targeted investment support and long-term policy certainty to unlock the deployment of low-carbon technologies at scale.  

Thierry Grauwels, EU Director, said: “The EU ETS, together with complementary regulatory tools like the CBAM and key funding schemes supported by EU ETS revenues, has been the backbone of Europe’s climate action for the past two decades, delivering emissions reductions while driving investment in cleaner technologies. Today’s Commission proposal builds on this success by strengthening the framework needed to decarbonise European industry, unlock investment, and safeguard competitiveness.” 

To build on this positive step forward, the CCSA stands ready to continue to engage with the European Parliament and Member States throughout the legislative process to ensure the final legislation delivers the stable carbon price, targeted investment support, and coherent regulatory framework required to deploy carbon management technologies at the pace needed to meet Europe’s 2050 climate objectives.  

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Notes to Editor  
Interview requests: please contact francesco.dapolito@ccsassociation.org  

About the CCSA  

CCUS, or Carbon Capture, Utilisation and Storage, is a key low carbon solution – vital to meeting the EU’s climate targets. CCUS enables industrial decarbonisation as well as the production of clean power, clean products (such as cement and chemicals) and clean hydrogen – which can also be used to decarbonise industry. In addition, CCUS also enables greenhouse gas removal from the atmosphere through Direct Air Capture with Storage (DACS) or Bioenergy with CCS (BECCS).   

The CCSA is the European trade association accelerating the commercial deployment of CCUS, with offices in Brussels and London. We work with members, governments and other organisations to ensure CCUS is developed and deployed at the pace and scale necessary to meet net zero goals and deliver sustainable growth across regions and nations.   

The CCSA currently has over 100 member companies who are active in exploring and developing different applications of carbon capture and removals, CO2 transportation by pipeline and ship, utilisation, geological storage, and other permanent storage solutions, end-users in the power, industry, waste management, fuels, and hydrogen production sectors, plus supply chain, engineering, construction and management, legal and financial consulting sectors.