EU weighs wider free carbon permits as cross-border CO2 storage law stalls EU-UK projects

EU weighs wider free carbon permits as cross-border CO2 storage law stalls EU-UK projects Brussels reviews free ETS allowances and readies 15 July rules, even as missing legal recognition for cross-border CO2 transport holds up EU-UK carbon capture projects. Heavy industry in Europe could gain a larger share of free carbon permits under the bloc's ongoing review of its Emissions Trading System, Reuters reported in coverage carried on Thursday (2026-06-19).⁷ The review collides with a warning from Britain's Carbon Capture and Storage Association, which said on Wednesday (2026-06-03) that EU-UK cross-border projects are stalling because the transport and storage of captured carbon dioxide lacks legal recognition once it crosses a border.⁵ How Brussels hands out permits, and whether it closes that cross-border gap, will together decide whether heavy industry can afford to decarbonise inside Europe rather than relocate.⁵ The Commission plans to propose updated ETS rules on 15 July to align the scheme with the bloc's 2040 target of cutting emissions 90% from 1990 levels, up from the 55% cut required by 2030.² Revenues collected through the EU ETS rose 11% in 2025 to EUR 43.2bn, 62% of all income raised by global carbon pricing schemes, according to an International Carbon Action Partnership report.¹ Energy-intensive users remain strongly opposed to the Commission's proposed changes to the benchmark values that govern free allowance allocation, ahead of a member-state vote expected on Monday (2026-06-15).⁶ The ETS caps emissions from carbon-intensive sectors including aviation, heavy industry and power, and covers around 40% of the bloc's greenhouse gas emissions.⁷ Brussels has already softened the carbon border adjustment mechanism, exempting all shipments under 50 tonnes, a change it says removes 90% of the firms originally caught while still covering 99% of the targeted emissions.³ The carve-out eases pressure on smaller importers but settles none of the core fight over how permits are allocated.³ Germany is where the strands meet. The Commission approved a German industrial decarbonisation scheme on Thursday (2026-05-07), calling it "necessary and appropriate" for helping companies clean up production.⁴ The country relies on gas for around 25% of its energy consumption, much of it industrial, so a tighter cap without a route to store captured CO2 raises compliance costs exactly where the carbon bill falls heaviest.⁷ Britain's own carbon market sharpens the problem. A pipeline carrying CO2 across the Channel works as an investment only if both regulators recognise the molecules moving through it, and any lasting gap between UKA and EUA pricing weakens the case for shared transport networks.⁵ The 15 July package will show whether Brussels treats cross-border CO2 recognition as a drafting detail or a genuine obstacle.² Leave it out, and the CCSA's warning stands, with EUR 43.2bn a year flowing into a system whose physical plumbing still cannot carry the emissions it is meant to cut.^1,5