Study urges EU to block offset use in ETS compliance after 2030
A study backs EU central purchasing of international carbon credits while barring their use in ETS compliance, to protect the EUA price signal.
A study published Monday (2026-07-13) recommended that the EU purchase international carbon credits centrally after 2030 but bar companies from applying them to meet emissions trading obligations — a design that would keep EUA Dec-rolling insulated from cheaper global offsets while directing climate finance toward developing markets.5
The EU ETS banned offset use in 2013, a decision that underlies the price signal now built into EUA Dec-rolling, which traded at $79.88 on Monday morning (2026-07-13). Allowing voluntary carbon credits into compliance pathways would dilute that signal. The study's proposed architecture separates the purchasing function from the compliance function, attempting to satisfy climate finance ambitions without reopening the compliance boundary.3,5
The scale context matters. A report from the International Carbon Action Partnership published in May (2026-05-21) found that EU ETS revenues rose 11% in 2025 to €43.2bn, representing 62% of all earnings raised by global carbon pricing schemes that year. At that size, the integrity of the compliance pathway shapes capital allocation across energy-intensive industry — steel, cement, aluminium, aviation — far beyond what any voluntary instrument touches.1
The voluntary carbon market remains small by comparison. Global volumes run at roughly $2bn a year, according to reporting from the Economist — a fraction of ETS compliance demand. Any structural bridge between the two markets would be asymmetric in its price effect: a wave of cheaper credits meeting a much larger and better-anchored compliance demand.3
The offset question has gained traction partly because the EU is also revising the Carbon Border Adjustment Mechanism, which covers imports of steel, aluminium, cement, fertiliser, and electricity. Industry is watching the interaction closely. Sarah Hay, climate policy lead at Norsk Hydro, told Montel on Thursday (2026-05-21) that international offsets should remain outside CBAM expansion proposals at least until the ETS review establishes whether they might ever be admitted to the compliance system. "There shouldn't be anything new coming in under CBAM that you don't have under the EU ETS now," she said.2
That position aligns with the study's architecture. If the ETS were eventually to admit offsets while CBAM had already widened its acceptable credit definition, the competitive distortion between domestic producers and importers would compound. The sequencing argument — settle ETS scope first, then extend CBAM — has broad industry support.2
Italy's pressure adds a separate strain. In April (2026-04-23), Rome urged the EU to scrap a planned revision to ETS benchmarks governing free allowances to industry, warning the changes would raise compliance costs for energy-intensive sectors already contending with elevated input prices and weakened export competitiveness.4
The tension runs in both directions. Stricter ETS rules — no offsets, tightened benchmarks — preserve the price signal and raise government revenues but increase costs for manufacturers at a moment when European industry is navigating difficult conditions. ICE Endex TTF front-month was trading at €51.39 on Monday (2026-07-13), down 0.75% on the session, a level that keeps coal-to-gas switching economics live in the power sector and sustains EUA demand from generators.5
The central purchasing model proposed in the study tries to thread that needle: the EU, rather than individual companies, would hold and retire international credits, keeping them off the compliance ledger while still funding climate projects abroad. Whether that structure attracts political support — particularly from member states seeking cheaper options for domestic industry — remains an open negotiating question heading into the formal ETS review process.5
The more immediate signal for carbon traders is the review timeline itself. Until the European Parliament Environment Committee finalises its draft report and the Commission responds to offset inclusion proposals, the compliance boundary stays where the 2013 ban fixed it. The study makes the case for keeping it there. Whether that argument holds through the legislative process will determine how firmly the floor under EUA Dec-rolling remains anchored as the post-2030 phase approaches.2