EN EN

EUROPEAN COMMISSION

Brussels, 17.7.2026

COM(2026) 619 final

2026/0211 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directive 2003/87/EC as regards revised benchmark values for the heat and

fuel benchmarks for the period from 2026 to 2030

{SEC(2026) 616 final} - {SWD(2026) 616 final} - {SWD(2026) 617 final} -

{SWD(2026) 618 final}

(Text with EEA relevance)

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

In recital (16) of Commission Implementing Regulation (EU) 2026/1412 of 26 June 2026

determining revised benchmark values for free allocation of emission allowances for the

period from 2026 to 20301 , the Commission committed to propose, at the same time as its

proposal to revise the ETS Directive, a stand-alone proposal solely to increase free allocation

levels determined by the heat and fuel benchmarks (‘fallback benchmarks’) up to 2030, while

ensuring the increase does not trigger the application of the cross-sectoral correction factor.

• Consistency with existing policy provisions in the policy area and with other

Union policies

All sectors of the economy should contribute to the reduction of greenhouse gas emissions.

The present proposal relates to free allocation determined by the heat and fuel benchmarks

until 2030 and aims at enhancing (without triggering the application of the cross-sectoral

correction factor) protection from carbon leakage through an increase of the corresponding

free allocation levels for the period from 2026 to 2030.

The changes introduced will be reflected in a Commission Implementing Regulation

amending the Commission Implementing Regulation on revised benchmark values for free

allocation of emission allowances, as well as a Commission Decision amending the

preliminary amounts of free allocation determined for the period from 2026-2030.

This proposal is solely on allocation levels determined by the heat and fuel benchmarks up to

2030, and all other issues are addressed in the broader proposal to amend the ETS Directive2,

including rules for benchmark values for the periods from 2031. The Explanatory

Memorandum to that proposal and its Impact Assessment3 explain the wider context.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The legal base is the same (Article 192(1) of the Treaty on the Functioning of the European

Union) as for the main ETS proposal, COM(2026) 616, as it addresses one element of the

overall revision.

• Subsidiarity (for non-exclusive competence)

Free allocation is harmonised in the EU ETS and administered at national level under

harmonised Union-wide rules.

• Proportionality

This proposal increases certain free allocation levels determined by the fallback benchmarks

until 2030. It does not go beyond what is necessary to ensure timely and effective support to

the sectors concerned and is designed in order not to trigger the application of the cross-

1 Commission Implementing Regulation (EU) 2026/1412 of 26 June 2026 determining revised

benchmark values for free allocation of emission allowances for the period from 2026 to 2030 pursuant

to Article 10a(2) of Directive 2003/87/EC of the European Parliament and of the Council, C/2026/4372

(OJ L, 2026/1412, 29.6.2026, ELI: http://data.europa.eu/eli/reg_impl/2026/1412/oj). 2 COM(2026) 616. 3 SWD(2026) 616.

EN 2 EN

sectoral correction factor, thereby avoiding negative redistribution effects on free allocation

determined on the basis of the product benchmarks.

• Choice of the instrument

The objectives of this proposal can be best achieved pursuant through a Regulation. This is

the most appropriate legal instrument to introduce amendments to the existing ETS Directive

as regards rules concerning the update of the benchmark values since those do not require

transposition by Member States. In addition, the update of the benchmark values is

implemented directly by the Commission in accordance with the empowerment in Article

10a(2), third subparagraph of the ETS Directive.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The Explanatory Memorandum to the proposal to amend the ETS Directive4, and its Impact

Assessment5 explain the wider context, including ex post evaluation and fitness check of the

ETS Directive.

• Stakeholder consultations

The Commission consulted the expert group on free allocation on the benchmark values for

the period 2026-2030 in different stages of the process leading up to their determination, with

preliminary results presented on 5 November 2025, 15 December 2025 and 21 January 2026.

The update of ETS benchmark values for 2026-2030 has been published for public feedback

between 11 May until 8 June 2026 and received more than 400 replies. More than 50% of the

feedback came from companies and 38% from business association. Overall, most of the

feedback concerned the fallback benchmarks update and asked to establish sector-specific

fall-back benchmarks. Some respondents asked to freeze the benchmarks and more

transparency. More positive comments welcomed the inclusion of indirect emissions in

benchmarks previously subject to exchangeability and urged for a swift adoption of the

regulation for clarity. Finally, proposals for the introduction of a different methodology were

submitted but none that could be implemented within the existing legal framework set by the

ETS Directive.

On 3 June, two expert group meetings were held, one with the Member States, and one with

Member States and industry representatives on the update of ETS benchmark values for the

years 2026-2030. The option for sector-specific fallbacks was presented to Member States and

highlighted as generating insufficient increase to free allocation levels until 2030 calculated

on the basis of fallback benchmarks for sectors at higher risk of carbon leakage due to limited

availability of abatement techniques and measures. This proposal therefore includes an

adjustment to the maximum update rate for fallback benchmark ensuring the highest possible

increase of free allocation determined on the basis of the fallback benchmarks until 2030,

without triggering the application of the cross-sectoral correction factor, as committed in

recital (16) to Implementing Regulation 2026/1412 and voted by the Climate Change

Committee on the 15th of June 2026.

4 COM(2026) 616. 5 SWD(2026) 616.

EN 3 EN

• Impact assessment

A single overall impact assessment accompanies both this proposal and the parallel

Commission proposal to revise the ETS Directive and was submitted to the Regulatory

Scrutiny Board (RSB) on 23 March 2026. The Explanatory Memorandum to the proposal to

revise the ETS Directive explains the wider context. The impact assessment includes the

consistency check of Article 6(4) of the European Climate Law, which requires the

Commission to assess the consistency of any EU draft measure or legislative proposal with

the Climate Law’s objectives, such as the EU’s climate-neutrality objective.

In Annex 12 to the Impact Assessment, an improved current approach on free allocation has

been assessed. As regards benchmarks, policy option ‘CL1’ in that Annex provided for the

following approach: Benchmarks will continue to be set by the average performance of the

10% best performing installations, taking into account the minimum and maximum update

rates and the rules for extrapolation of the trend to the mid-point of the relevant five-year

allocation period. However, to address the main concerns raised by industry stakeholders and

Member States during the various stages of consultation of the recently adopted Benchmark

Regulation, fallback benchmarks should be differentiated to take into account the specificities

and emission reduction potential of the different sectors.

The proposal differs from the policy option included in the impact assessment as regards the

fallback benchmarks. The sector-specific approach included in the impact assessment would

deliver an increase to free allocation to a limited number of sectors only, as the same

maximum update rate would still apply. Discussions with Member States and stakeholders in

the Climate Change Expert Group (CCEG) on free allocation issues on 3 June 2026

confirmed that the corresponding overall increase to free allocation levels until 2030 was

insufficient to address the higher vulnerability to carbon leakage of certain sectors where the

fallback benchmarks apply and in which limited abatement techniques and measures are

available. Instead, the present proposal ensures the highest possible increase to free allocation

levels determined on the basis of fall-back benchmarks for the 2026-2030 period, without

triggering the application of the cross-sectoral correction factor pursuant to Article 10a(5) of

the ETS Directive.

• Regulatory fitness and simplification

Limited administrative burden will result from this proposal. The proposal relies solely on

existing processes, involving both national competent authorities and the Commission,

towards establishing the level of free allocation to be allocated each year to installations in the

EU ETS in accordance with Article 11 of the ETS Directive. It implies a follow up revision of

Commission Delegated Regulation (EU) 2019/331 of 19 December 20186. The amendments

do not require transposition in national laws. Finally, no additional data collection exercise

will be needed since the relevant dataset is already available. Indeed, pursuant to point (c) in

the third subparagraph of Article 10a(2) of the ETS Directive, the information submitted by

Member States for the years 2021 and 2022 in the list referred to in Article 11 of the ETS

Directive is to be used as reference for the update of the benchmark values for the period from

2026 to 2030.

6 Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional

Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of

Directive 2003/87/EC of the European Parliament and of the Council (OJ L 59, 27.2.2019, pp. 8–69).

EN 4 EN

4. BUDGETARY IMPLICATIONS

The proposal relies on existing processes, involving both national competent authorities and

the Commission, towards establishing the level of free allocation to be allocated each year to

installations in the EU ETS in accordance with Article 11 of the ETS Directive. For the

implementation of the proposal, no additional data is collected and no additional human and

administrative resources are required. The additional free allocation to be granted under this

proposal does not impact the budget, given that the financial value of the allowances to be

used is not attributed to the budget of the European Commission. Therefore, no additional

budgetary implication is induced by the present proposal.

The proposal does not meet the criteria that would trigger digital relevance. It does not impose

binding requirements concerning a digital public service with implications for cross-border

interoperability, and does not affect the design, development, or implementation of digital

public services or the networks and information systems supporting them. Neither does it

require the establishment of IT systems or digital infrastructure co-owned by the European

Commission and Member States. Furthermore, the proposal does not introducemonitoring,

reporting, or other business-agnostic processes that are likely to be automated or digitally

implemented.

Given the absence of both financial implications and digital relevance, an accompanying

Legislative Financial and Digital Statement (LFDS) is not necessary for this proposal.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting

The Commission will continue to monitor and evaluate the functioning of the ETS in its

annual Carbon Market Report, as foreseen under Article 10(5) of the ETS Directive. It will

cover the impacts of the current revision of the ETS. The Carbon Market Report relies on the

analysis of the evaluation of progress on the application of the ETS Directive that is regulated

in Article 21 of the ETS Directive, which requires Member States to report to the Commission

on issues including the allocation of allowances, operation of the Registry, application of

monitoring and reporting, verification and accreditation and issues relating to compliance.

The annual Carbon Market Report and Member States reporting also apply to the sectors to

which emissions trading is extended. The MRV data obtained through the regulation of the

new sectors will be a key source for information for the Commission to evaluate progress in

the sectors concerned.

The integrated governance and monitoring process under the Regulation on the Governance

of the Energy Union and Climate action is also expected to make sure that climate and

energy-related actions at European, as well as regional, national and local level, including the

ETS, contribute to the EU climate neutrality and Energy Union's objectives. Several market

analysts closely follow various aspects of the carbon market and its functioning, and the

Commission will continue to monitor this work.

Through regular contacts with stakeholders, the Commission is alert to their views and

concerns about the functioning of the ETS. ETS-related matters are discussed in a dedicated

forum, the Climate Change Expert Group (CCEG) which brings together Member States

competent authorities, stakeholders (industry associations and NGOs) and the Commission. In

its different formations, the CCEG discusses, among other aspects, the implementation of free

allocation, auctioning and issues related to the functioning of the Union Registry. Update to

the rules on benchmarks have been and will keep being presented and discussed in the

EN 5 EN

formation of the CCEG dedicated to free allocation. In addition, the ETS Compliance Forum

provides the competent authorities of all ETS countries (the 27 Member States, Norway,

Iceland and Liechtenstein) with a platform for sharing information, learning and experience,

leading to effective implementation of the ETS. The forum executes targeted events, such as

the Compliance Forum Conference, organized annually and aimed at sharing experiences and

facilitating dialogue amongst Member States competent authorities, as well as task forces

dedicated to specific topics and training events. National Accreditation Bodies and verifiers

are sometimes invited to participate to the activities of the ETS Compliance Forum, where

relevant.

• Detailed explanation of the specific provisions of the proposal

This proposal amends Article 10a as concern the determination of the revised values for the

heat and fuel benchmarks until 2030. The main changes introduced are the following:

The proposal provides for the adjustment to the maximum annual update rate to be applied to

heat and fuel benchmarks for the update by the Commission of those benchmark values until

2030. In that case, the adjusted percentage rate value to be applied will reflect the highest

possible upwards adjustment to free allocation levels determined by the heat and fuel

benchmarks by fully using the available allowances that can be allocated free of charge for

2026 to 2030, amounting to around 80 million allowances, while at the same time not

triggering the application of the cross-sectoral correction factor. The minimum update rate

remains unchanged. The reference periods, datasets and overall methodology to update the

benchmark values remain unchanged. The benchmark values will be adjusted for the period

from 2027 to 2030. The adjustment to free allocation levels for the year 2026 will be

implemented through an update of the benchmark values for the year 2027 applying a

maximum update percentage rate value that makes use of 40 % of the additional amount

referred to in Article 10a(5a) and ensures that no reduction pursuant to Article 10a(5) applies.

EN 6 EN

2026/0211 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directive 2003/87/EC as regards revised benchmark values for the heat and

fuel benchmarks for the period from 2026 to 2030

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Article 192(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee1,

Having regard to the opinion of the Committee of the Regions2,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) Free allocation to installations in the system for greenhouse gas emission allowance

trading within the Union (EU ETS) is determined based on harmonised Union-wide

benchmarks reflecting the performance of the most efficient installations. The ex-ante

Union-wide benchmarks are established in Annex I to Commission Delegated

Regulation (EU) 2019/3313. The Commission updates the benchmark values for each

five-year period for free allocation referred to in Article 11 of Directive 2003/87/EC in

accordance with the rules laid down in Article 10a of that Directive.

(2) To address concerns expressed by certain industrial sectors in the context of updating

the benchmark values until 2030 and provide additional protection against the risk of

carbon leakage, the quantity of allowances to be allocated for free for the period from

2026 to 2030, determined by the heat and fuel benchmarks (‘fallback benchmarks’),

should be increased. In order to do so, it is appropriate to adjust the maximum annual

update rate applied for the fallback benchmarks by using the totality of the allowances

available for free allocation in the period from 2026 to 2030 as laid down in

Commission Decision XXX4 [CSCF Decision], amounting to around 80 million

allowances. In line with the targeted nature of this adjustment and the rules set out in

in Commission Delegated Regulation (EU) 2019/331 on the determination of the

1 OJ C , , p. . 2 OJ C , , p. . 3 Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional

Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of

Directive 2003/87/EC of the European Parliament and of the Council (OJ L 59, 27.2.2019, p. 8, ELI:

http://data.europa.eu/eli/reg_del/2019/331/oj). 4 [please insert the full reference once available – CSCF Decision]

EN 7 EN

annual amount of allowances allocated for free to installations, the additional free

allocation resulting from the adjustment should only concern the amounts determined

by the fallback benchmarks.

(3) To avoid unnecessary administrative burden for operators and public authorities

related to the adjustments of free allocation decisions and the transfer of allowances to

operators’ accounts, the benchmark values should be adjusted for the period from

2027 to 2030, while the additional free allocation amounts for the year 2026 should be

made available together with the free allocation for the year 2027. To ensure sufficient

time is provided for to reflect this adjustment in the context of Regulation (EU)

2023/956 of the European Parliament and of the Council5, the resulting adjustment to

free allocation levels for the year 2026 should be implemented through the

corresponding update of the benchmark values for the year 2027.

(4) To preserve the level playing field and prevent negative effects on free allocation

determined on the basis of the product benchmarks, it is necessary to ensure that the

adjusted percentage rate value for the maximum annual update rate used to determine

the fallback benchmarks until 2030 does not trigger the application of the cross-

sectoral correction factor pursuant to Article 10a(5) of Directive 2003/87/EC.

(5) To further incentivise decarbonisation, it is appropriate for the existing maximum

update rate for fallback benchmarks established under Article 10a(2), third

subparagraph, point (d), of Directive 2003/87/EC for the period from 2026 to 2030 to

continue to be applicable to installations carrying out oil and gas activities, including

as regards the free allocation amounts determined on the basis of the fallback

benchmarks. To further operationalise the differentiated treatment between oil and gas

activities and other activities the fallback benchmarks are applied to, the Commission

should establish the corresponding sector specific sub-benchmarks under the ex-ante

heat and fuel benchmarks for activities covered by NACE codes 0610, 0620, 1920 and

4950 set out in Annex I to Regulation (EC) No 1893/2006 of the European Parliament

and the Council6.

(6) Directive 2003/87/EC should therefore be amended accordingly.

(7) To ensure a swift increase of free allocation levels determined on the basis of the

fallback benchmarks that reflect the revised maximum annual update rate value, and to

ensure that those additional amounts are made available as of the determination of free

allocation for the year 2027, this Regulation should solely address allocations under

those benchmarks within the amount of allowances available and enter into force on

the third day following that of its publication,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Amendments to Directive 2003/87/EC

Directive 2003/87/EC is amended as follows:

5 Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing

a carbon border adjustment mechanism (OJ L 130, 16.5.2023, pp. 52–104). 6 Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006

establishing the statistical classification of economic activities NACE Revision 2 and amending Council

Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L

393, 30.12.2006, p. 1, ELI: http://data.europa.eu/eli/reg/2006/1893/oj).

EN 8 EN

(1) in Article 10a, the following paragraphs 2a and 2b are inserted after paragraph 2:

‘2a. By way of derogation from paragraph 2, third subparagraph, point (d), of this

Article, the maximum annual reduction rate to be applied for the update of the

benchmark values for heat and fuel benchmarks for the period from 2027 to 2030

shall be reduced to a percentage rate value that makes full use of the additional

amount referred to in Article 10a(5a) and ensures that no reduction pursuant to

Article 10a(5) applies.

Concerning the update of the benchmark values for heat and fuel benchmarks for the

year 2027, the maximum annual reduction rate to be applied shall be reduced to a

percentage rate value that makes use of 40 % of the adjustment pursuant to the first

subparagraph and ensures that no reduction pursuant to Article 10a(5) applies.

2b. Paragraph 2a shall not apply to free allocations for installations carrying out

economic activities covered by NACE codes 0610, 0620, 1920 and 4950 set out in

Annex I to Regulation (EC) No 1893/2006 of the European Parliament and the

Council*.

______

* Regulation (EC) No 1893/2006 of the European Parliament and of the Council of

20 December 2006 establishing the statistical classification of economic activities

NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as

certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1,

ELI: http://data.europa.eu/eli/reg/2006/1893/oj).’

Article 2

This Regulation shall enter into force on the third day following that of its publication in the

Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

    Resolutsiooni liik: Riigikantselei resolutsioon Viide: Kliimaministeerium /  / ; Riigikantselei /  / 2-5/26-01507

Resolutsiooni teema: ELi heitkogustega kauplemise süsteemi soojuse ja kütuse võrdlusaluste ajakohastamine aastateks 2026–2030

Adressaat: Kliimaministeerium Ülesanne: Tulenevalt Riigikogu kodu- ja töökorra seaduse § 152` lg 1 p 2 ning Vabariigi Valitsuse reglemendi § 3 lg 4 palun valmistada ette Vabariigi Valitsuse seisukoha ja otsuse eelnõu järgneva algatuse kohta, kaasates seejuures olulisi huvigruppe ja osapooli:

- Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC as regards revised benchmark values for the heat and fuel benchmarks for the period from 2026 to 2030, COM(2026)619

EISi toimiku nr: 26-0305 Tähtaeg: 28.08.2026

Adressaat: Majandus- ja Kommunikatsiooniministeerium, Rahandusministeerium Ülesanne: Palun esitada oma sisend Kliimaministeeriumile seisukohtade kujundamiseks antud eelnõu kohta (eelnõude infosüsteemi (EIS) kaudu). Tähtaeg: 19.08.2026

Lisainfo: Eelnõu on kavas arutada valitsuse 03.09.2026 istungil ja Vabariigi Valitsuse reglemendi § 6 lg 6 kohaselt sellele eelneval nädalal (02.09.2026) EL koordinatsioonikogus. Esialgsed materjalid EL koordinatsioonikoguks palume esitada hiljemalt 28.08.2026. 

Kinnitaja: Siim Tiidemann, Euroopa Liidu asjade direktor Kinnitamise kuupäev: 29.07.2026 Resolutsiooni koostaja: Sandra Metste [email protected],  

.