A 1000 word article by the Carbon Market Watch describes the challenges and critiques surrounding the update of the EU ETS free allocation rules and its implications for heavy industries in the context of the climate crisis.

Lidia Tamellini and Aymeric Amand delve into the EU ETS free allocation rules’ update, questioning its viability amid the climate crisis. Exemptions for heavy industries from the Emissions Trading System raise concerns about the contradiction with the “polluter-pays principle.” Despite the goal of industrial decarbonization, a substantial portion of carbon emissions remains exempted. The existing free allocation system is criticized for inadequately incentivizing decarbonization. The proposed decline in free allocation is considered insufficient for long-term climate goals. Scrutinizing the Free Allocation Regulation (FAR) revision, the authors highlight concessions to emission-intensive industries and shortcomings in benchmarks like cement and steel. Emphasizing the revision’s crucial nature, policymakers are urged to evaluate the feasibility of allowing pollution during a climate crisis. This summary offers essential insights into ongoing discussions about effective climate action, despite potential challenges in public awareness.