Brussels Readies July 15 ETS Overhaul as Aviation Inclusion Looms

Brussels Readies July 15 ETS Overhaul as Aviation Inclusion Looms A pending Commission proposal to fold international flights into the EU carbon market arrives as one analyst already flags a possible 13% price hit from separate reforms. The European Commission plans to publish updated EU ETS rules on 15 July, according to its latest draft agenda, with Bloomberg reporting that one element under preparation would extend the carbon market to international flights.⁵ The package is meant to align the scheme with the bloc's 2040 climate goal and accommodate industrial needs, and is required under EU law.⁵ For carbon traders the timing is what counts. Brussels is reopening the ETS rulebook at the same moment analysts are warning that other adjustments under consideration could pull prices lower, leaving the aviation question to land on a market already braced for change.^5,6 The bearish marker comes from Veyt. A senior analyst at the consultancy said on Wednesday (2026-03-25) that an ETS adjustment being weighed by the Commission could cut carbon prices in the bloc by roughly 13% over the next two years.⁶ That is one firm's read, not a market consensus, and it concerns the broader reform rather than aviation specifically. Still, it sets the reference point against which any flight-inclusion measure will be judged. Folding international aviation into the ETS would, in isolation, add a new layer of compliance demand. More covered flights mean more allowances surrendered. Whether that tightens the market depends entirely on how the Commission handles supply alongside it, which is the part the 15 July text has yet to reveal.⁵ The carbon market is not short of cash. EU ETS revenues rose 11% in 2025 to EUR 43.2bn, accounting for 62% of all earnings raised from carbon pricing schemes worldwide, according to a study by the International Carbon Action Partnership.¹ That figure underlines how central the EU system has become to climate finance, and why governments have a stake in keeping prices from sliding too far. There is a second front. The European Parliament voted on Wednesday (2026-05-20) to open talks with the Council on finalising rules to stabilise prices in the separate ETS2, the planned market for buildings and transport fuels.² Aviation sits in the main ETS, not ETS2, but the parallel push shows Brussels working price stability into multiple corners of its carbon architecture at once. The political weather is harder to read. The same institutions tightening carbon coverage are simultaneously loosening other green rules. A passed omnibus measure now exempts firms importing less than 50 tonnes a year of products such as steel or fertiliser from the carbon border adjustment, a carve-out the Commission says still captures 90% of emissions.^3,4 Companies below 5,000 staff and EUR 1.5bn in revenue no longer need to track their global footprint.³ That deregulatory drive matters for how an aviation proposal is likely to be received. Brussels has spent the spring trimming compliance burdens, with eurocrats estimating the simplification could cut business administrative costs by EUR 37.5bn a year by 2029.³ Adding airlines to the ETS cuts against that current, and the airline lobby will press the contradiction. Stakeholders are also split on the tools available to manage prices. Only a third of EU ETS stakeholders explicitly back allowing carbon credits into the system, according to a Carbon Pulse data review published on Wednesday (2026-05-27).⁷ That lukewarm support narrows the Commission's room to soften any tightening with offsets. The current signal in EUA-linked instruments points bearish, with three directional signals and no bullish weight in the packet's read.⁶ A softer EUA price feeds through the European power stack: weaker carbon lowers the cost of running coal plants, which supports cleaner-burning gas demand at the margin and can lift API2 coal economics relative to TTF in the switching range. The chain runs from the carbon rule change outward, not the other way. For now the market is trading on an agenda item, not a text. The Commission's draft schedule names 15 July; Bloomberg's reporting flags aviation; Veyt's 13% figure frames the downside.^5,6 What none of them settles is the allowance supply that will determine whether more covered flights tighten the market or simply redistribute a pool that Brussels is, on balance, trying to keep liquid. The number to fix on is the cap. When the 15 July proposal lands, the test is whether aviation arrives with its own allowance allocation or draws on the existing pool, and whether the broader adjustment Veyt flagged shows up alongside it.^5,6 Until then, the 13% downside is a single analyst's estimate, and the aviation line is a Bloomberg report of a draft. Trade it as such.