Portugal is urging the European Commission to reconsider its recent decision to reduce free polluting allowances for the industry under the bloc's carbon market, fearing the move would weaken companies' ability to invest in decarbonisation, according to a document seen by Euronews.
Portugal’s energy minister, Maria da Graça Carvalho, argues that the Commission review of the industry's free allocations for the 2026–2030 period under the Emissions Trading System comes at a particularly difficult moment for Europe’s energy-intensive industries, which have been struggling with high energy prices and production costs.
Under the ETS, industries need to pay for the carbon pollution linked to their production but they are also eligible for free allowances to prevent production from moving outside the EU to countries with weaker climate policies.
With the Commission's decision to reduce these allowances, Graça Carvalho argues that companies are already grappling with elevated energy costs, intense international competition and investments tied to the transition to greener production methods.
Portugal is proposing a temporary freeze on the previous carbon allowance volumes until the wider ETS review due on 15 July is completed. The government suggests that any freeze should be targeted at each industry sector to ensure that companies continue receiving meaningful protection from excessive compliance costs.
