The EU might weaken its landmark climate law — the ‘most impactful’ in the world

The European Union is considering changes that could slow down its main climate law, a cap-and-trade system called the Emissions Trading System (ETS). Since 2005, this system has cut industrial carbon emissions in the EU by about half by making roughly 10,000 companies, including oil refineries and power plants, buy permits for the pollution they release, with fewer permits available each year.

The European Commission has proposed slowing that yearly reduction and giving free pollution permits to more companies, including some that have lobbied for the change, like steelmaker ArcelorMittal and chemical company BASF. Supporters say this eases pressure on industry while still aiming to hit the EU's broader 2040 climate target. Critics argue it could let companies release about 2 billion more metric tons of carbon than originally planned over the next decade, at a time when scientists say the world has limited room left to keep warming under 1.5 degrees Celsius. The proposal still needs approval from EU lawmakers, and some officials have said they will fight to keep the stronger rules. A final decision is expected early next year.

This news does not involve any rebate, program, or direct action for a homeowner. It matters mainly because the EU's system has been a model for other carbon markets, including California's, and observers worry that weakening it could give industry groups elsewhere a stronger case for loosening their own state or regional climate rules.