The European Commission proposes redirecting a larger share of the €24bn collected annually from the EU emissions trading scheme toward helping polluting industries cut emissions. Currently less than 5 per cent of the revenue is used for that purpose.

The plan aims to support the bloc’s target of cutting greenhouse gases by 90 per cent by 2040 versus 1990 levels, and to address industry complaints that carbon costs hurt competitiveness. Finance ministries, which control national budgets, are expected to resist because most revenues now fund other climate projects or general spending, with countries such as Austria, France, Netherlands, and Germany providing little transparency.

Officials also consider extending free allowances for longer but attaching stricter conditions to spur investment, and the review covers expanding the scheme to flights leaving the EU and adjusting shipping rules. Think‑tank fellow Joseph Dellatte argues the carbon market should build the industrial capacity Europe wants to retain in 2050.