Six EU states demand more free carbon permits in coordinated challenge to ETS benchmark revision

Six EU states demand more free carbon permits in coordinated challenge to ETS benchmark revision A joint nonpaper from Bulgaria, Czechia, Greece, Poland, Romania and Slovakia pushes the Commission to loosen industrial allowance allocations, amplifying bearish pressure on EUA. Six European Union member states called on the European Commission to overhaul the Emissions Trading System's free allowance framework, demanding that heavy industry receive a larger share of permits to shore up EU manufacturing competitiveness. Bulgaria, Czechia, Greece, Poland, Romania and Slovakia issued the joint nonpaper, seen by Politico, on Thursday (2026-05-28), making their case in writing before the Commission's planned benchmark revision advances further.⁶ The benchmarks in question determine how many free allowances energy-intensive industries — steel, cement, chemicals — receive without paying market price. Tighter benchmarks mean less free supply, higher compliance costs, and upward pressure on EUA demand. Looser benchmarks do the opposite. The six-country demand, if heeded, would widen free allocations and reduce the number of permits that must be purchased in the market.^6,2 Italy had already staked out a harder position. On Thursday (2026-05-21), Rome urged the Commission to scrap the benchmark revision entirely rather than modify it, warning the exercise would raise compliance costs for energy-intensive industries and weaken European industrial competitiveness, Montel reported. That call and the six-country nonpaper pursue the same outcome through different arguments.² The Commission faces an awkward set of numbers. EU ETS revenues reached EUR 43.2bn in 2025, an 11% increase on the prior year, and accounted for 62% of all earnings raised from carbon pricing schemes globally, according to an International Carbon Action Partnership study. A system generating that much revenue and that share of global carbon finance is not easily reformed on political grounds alone.¹ Still, markets are pricing in the risk that it will be. A senior analyst at Veyt warned in March (2026-03-25) that an ETS adjustment under active Commission consideration could cut carbon prices by roughly 13% over the next two years, Montel reported. The ICE EUA Dec-rolling contract reflects a bearish consensus, with signals pointing to downside from policy-driven supply increases.⁵ The pressure does not come only from member states seeking relief for industry. Energy Traders Europe chief executive Mark Cople described the EU's carbon border adjustment mechanism as "mind-bogglingly complicated" in May (2026-05-12), warning that rising volatility in Western Balkan power markets was partly a product of operational uncertainty around CBAM. A simplified version of the mechanism — which now excludes shipments under 50 tonnes, covering roughly 90% of firms by the Commission's count — has not quieted the criticism. Traders say the underlying burden remains.^4,3 The six countries and Italy are pushing in the same direction, but the political weight of their coalition matters. Bulgaria, Czechia, Greece, Poland, Romania and Slovakia are not the bloc's largest emitters, and they do not collectively carry the industrial lobbying force of Germany or France. If Berlin or Paris aligns with the dissenting group before the revision enters the formal legislative process, the Commission's position becomes materially harder to hold. If they stay out, the revision proceeds on its current track. What to watch is whether the Commission issues a formal response to the nonpaper ahead of any legislative proposal, and whether the 13% price-cut scenario flagged by Veyt in March (2026-03-25) sharpens into a harder consensus among carbon market participants as the summer legislative calendar takes shape.⁵