EBF Recommendations on the Emissions Trading Scheme Revision to Support Long-Term Financing in the Clean Energy Transition

EBF Recommendations on the Emissions Trading Scheme Revision to Support Long-Term Financing in the Clean Energy Transition 

Brussels, 30 October 2026 - The European Banking Federation (EBF) welcomes the Commission's proposal to revise the EU Emissions Trading System (ETS) and calls on co-legislators to maintain a strong, credible and predictable carbon price signal. Banks finance the transition over the long term and act as market makers and client facilitators in the carbon market, so regulatory stability is what allows them and their clients to plan and fund decarbonisation investments. The EBF's key considerations set out how the revision can keep the ETS focused on investment, recognise companies that have already moved, preserve a deep and liquid carbon market, and make clean industrial projects bankable.

The EBF's key considerations s on the ETS revision:

• Keep the ETS focused on long-term transition investment. Calibrate the linear reduction factor, free allocation and the Market Stability Reserve to keep the carbon price strong, stable and predictable-which is essential for long-term financing decisions.
• Protect frontrunners. Recognise and reward investments companies have already made.
• Preserve financial institutions' participation in the ETS. Banks support liquidity, price discovery and risk management as market makers and client facilitators. Avoid restrictions that would raise the cost of managing carbon-price risk for ETS compliance entities.
• Ensure access to clean energy at sufficient volumes and competitive prices. Expanding clean generation, grids and storage, with faster permitting, must go hand in hand with a strong carbon price signal.
• 25% of ETS revenues for de-risking clean technologies. At least half of the revenue earmarked for the   decarbonisation of ETS sectors should go directly to clean technologies. The remaining 50 % should prioritise de-risking instruments that mobilise private capital.
• Ensure Industrial Decarbonisation Bank (IDB) improves bankability. The IDB should crowd in private capital, focus on commercial risk and mature projects, and use variety of financial instruments including blended finance and risk-sharing to address revenue uncertainty and demand risk.
• Maintain the agreed phase-out of free allowances, with safeguards. This means effective CBAM protection, investable lead markets and transparent review triggers. Free allocation should be tied to actual investments, with claw-back where these are not delivered.
• Allow limited use of high-integrity international carbon credits.  Such credits subjected to clear eligibility rules, can serve as a complementary safety valve against extreme price volatility, without weakening the ETS price signal or displacing domestic decarbonisation.

Read the full response here

For more information:

Denisa Avermaete, Head of Sustainable Finance Team,d.avermaete@ebf.eu

Jānis Priekulis, Senior Policy Adviser – Sustainable Finance, j.priekulis@ebf.eu

About the EBF:

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The federation is committed to a thriving European economy that is underpinned by a stable, secure, and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.