On 8 June 2026, Carbon Management Europe (formerly Zero Emissions Platform) responded to the European Commission’s public consultation on the Revision of the benchmark values for free allocation of emission allowances (2026-2030).
About the response
The EU ETS remains the European Union's primary carbon pricing instrument and a key driver of industrial decarbonisation. Benchmark-based free allocation plays an important role in addressing carbon leakage risks while preserving incentives to reduce emissions and invest in low-carbon technologies. Periodic benchmark updates are therefore essential to ensure that free allocation remains aligned with observed technological and industrial developments.
Carbon Management Europe supports the principle of regularly updating benchmark values using the best available data. Benchmark methodologies should remain transparent, evidence-based, and predictable, providing industry with the long-term visibility needed to support investment decisions. This is particularly important for capital-intensive industrial decarbonisation projects, including carbon capture and storage (CCS), carbon capture and utilisation (CCU), low-carbon hydrogen, industrial electrification, process innovation and other emissions-reduction technologies.
The current revision raises important questions regarding the treatment of indirect emissions, the evolution of fallback benchmarks, and the interaction between free allocation and other carbon leakage protection mechanisms. Carbon Management Europe does not take a position on the level of free allocation that should be provided to individual sectors. Rather, our interest lies in ensuring that benchmark methodologies remain consistent with the objectives of the EU ETS, preserve the integrity of carbon accounting frameworks, and support the deployment of cost-effective industrial decarbonisation pathways.
In this context, Carbon Management Europe encourages the Commission to ensure that any methodological changes are accompanied by a high degree of transparency regarding their rationale, expected impacts and interaction with other elements of the EU ETS framework.
Carbon Management Europe's recommendations
Carbon Management Europe supports the regular revision of EU ETS benchmark values to ensure that free allocation continues to reflect technological progress and industrial developments. As industrial decarbonisation pathways evolve, benchmark methodologies must remain transparent, evidence-based and consistent with the long-term objectives of the EU ETS.
The proposed revision raises important questions regarding the treatment of indirect emissions, the evolution of fallback benchmarks, and the interaction between free allocation and other carbon leakage protection mechanisms. While these questions merit careful consideration, any methodological changes should continue to support predictable investment conditions and maintain confidence in the integrity of the EU ETS framework.
In particular, Carbon Management Europe encourages the European Commission to:
- Continue updating benchmark values using the most recent and representative industrial datasets, ensuring that benchmark methodologies remain aligned with observed technological and operational developments.
- Provide greater transparency regarding the treatment of indirect emissions in benchmark calculations, including benchmark-level impacts, allocation impacts and the rationale underpinning the proposed methodology.
- Clarify the interaction between benchmark methodologies, free allocation and Indirect Cost Compensation (ICC), while maintaining a clear distinction between emissions accounting, allocation rules and compensation mechanisms.
- Ensure that fallback benchmark methodologies remain evidence-based, transparent and representative of achievable industrial performance, while preserving simplicity and comparability across sectors.
- Maintain technology-neutral benchmark methodologies that support a broad range of industrial decarbonisation pathways, including CCS, CCU, low-carbon hydrogen, electrification, process innovation and other emissions-reduction solutions.
- Preserve clear and robust carbon accounting principles that distinguish between direct emissions, indirect emissions, compensated costs and ETS compliance obligations.
- Promote regulatory predictability and investment certainty for long-term industrial decarbonisation projects, recognising the importance of stable policy frameworks for capital-intensive investments.