EU environment ministers held a policy debate on the review of the EU Emissions Trading System (ETS) on October 12, 2026. The file decides how fast CBAM costs rise after 2027: the Commission's proposal of July 17, 2026 would end the CBAM phase-in in 2038 instead of 2034. Nothing was decided and the law has not changed. The Irish Presidency of the Council wants an agreed Council position in December.
On the same day the EU allowance auction cleared at €86.28. The running average that will become the Q4 2026 CBAM certificate price stands at €84.76 per tonne of CO₂e, against the official €82.32 for Q3. The Q4 figure is this site's calculation, not an official price.
What ministers debated on October 12
Ministers held a policy debate on the Commission's two ETS review proposals, guided by a Presidency background paper with three questions. The Council's provisional agenda of October 9 lists the item as "Emission Trading System (ETS) review", a "Policy debate" in public session in Luxembourg, not a vote. The main proposal is COM(2026) 616, which would amend the ETS Directive 2003/87/EC.
The Presidency paper, dated September 25, 2026, names "three key areas where views diverge widely": the overall trajectory of ambition, the distribution and use of funds, and the sectoral scope. CBAM sits in the first. One question asks ministers whether the funding framework and the "extension of free allocation (including for CBAM sectors)" strike the right balance.
Certificate price alerts and the regulatory changes that matter. Get weekly updates on what happens regarding anything CBAM-related. No spam, unsubscribe anytime.
We store only your email address for these alerts. Privacy policy
What the Presidency paper says about CBAM
The paper describes two separate changes: free allocation in general would run to 2040, and the CBAM phase-in would end in 2038. In its words: "For sectors considered at risk of carbon leakage, the Commission proposal extends free allocation from 2030 to 2040. Free allocation from 2031 would be conditional on investment in decarbonisation in the EU."
On CBAM it says: "The proposal further aims to reduce carbon leakage risk by slowing down CBAM phase-in from 2034 to 2038. For CBAM sectors, the CBAM factor (the rate at which free allocation is reduced) is amended."
The year 2040 concerns free allocation for EU industry at risk of carbon leakage as a whole. The year 2038 concerns CBAM goods, whose EU producers would keep a shrinking share of free allowances until the end of 2037.
What came out of the debate
The outcome is known to this site only from press headlines; the articles are behind a paywall and we have not read them. Carbon Pulse published three on October 12: "EU ministers divided over ETS ambition, as free allowances and ETS2 expose fractures", "Majority of EU countries back dedicated solution to support CBAM exports" and "Czechia, Italy call for industry-focused EU carbon market overhaul, ETS2 suspension". These are reports, not Council conclusions.
The Presidency's next steps are in its paper. It "is aiming to issue a first compromise text on those less contentious aspects after the Environment Council on 12 October 2026", and "the Irish Presidency is aiming to achieve a General Approach at the December Environment Council", that is, a Council negotiating position. The paper recalls that leaders committed to completing the revision "by Q1 2027". Parliament's rapporteur Peter Liese has described the same timetable: positions by year-end and trilogues from January 2027.
What the proposal would change in the CBAM factor
The proposal would rewrite the CBAM factor from 2028: it would fall more slowly and reach zero in 2038, where today's law ends it in 2034. The CBAM factor is the share of free allocation that EU producers of CBAM goods keep (Article 10a(1a) of Directive 2003/87/EC). Importers deduct that factor times the product benchmark from their embedded emissions, so a higher factor means fewer certificates. The Commission's explanatory memorandum proposes that "15% of the free allocation phased out due to the CBAM factor be reintroduced, starting in 2028".
| Year | CBAM factor, law in force | CBAM factor, COM(2026) 616 (proposal) |
|---|---|---|
| 2026 | 97.5% | 97.5% |
| 2027 | 95% | 95% |
| 2028 | 90% | 91.5% |
| 2029 | 77.5% | 81% |
| 2030 | 51.5% | 59% |
| 2031 | 39% | 48% |
| 2032 | 26.5% | 37.5% |
| 2033 | 14% | 27% |
| 2034 to 2037 | No factor applies | 15% |
| From 2038 | No factor applies | 0% |
Sources: Article 10a(1a) of Directive 2003/87/EC; Article 1(15)(b)(i) of COM(2026) 616.
The right-hand column is the Commission's text of July 17, which our report on the proposal described without the yearly values. Council and Parliament can change every figure in it.
Certificate price alerts and the regulatory changes that matter. Get weekly updates on what happens regarding anything CBAM-related. No spam, unsubscribe anytime.
We store only your email address for these alerts. Privacy policy
Why the schedule matters: one example under current law
For a good declared on default values, the shrinking deduction drives much of the cost increase to 2034. Take steel billets from Türkiye (CN 7207 11 14) at the Q3 price of €82.32, with the default value and benchmark held constant. Under the law in force the cost is €99.70 per tonne for 2026 imports, €189.38 for 2030 and €247.21 from 2034, when no deduction remains. Part of the rise comes from the default mark-up, which goes from 10% in 2026 to 30% from 2028; the free allocation phase-out page shows the calculation.
Under the proposal a larger deduction would apply from 2028 and some deduction would remain through 2037, so the later figures would be lower. This site has not calculated costs on factors that are not law. The year-by-year cost table under current law remains the reference.
Where the carbon price stands
The October 12 auction cleared at €86.28 and the Q4-to-date average is €84.76, which is €2.44 above the official Q3 price. The average rests on the eight auctions held from October 1 to October 12. It is this site's calculation from EEX auction results by the Commission's method. The official Q4 price is due on January 4, 2027.
For 2026 imports, the certificate price is the average of the EU ETS auction clearing prices in the quarter of import, weighted by auction volume (Article 21(1a) of Regulation (EU) 2023/956; Article 1 of Implementing Regulation (EU) 2025/2548). Every auction until the end of December will move the average. The CBAM certificate price tracker shows the current figure beside the official Q3 price.
Carbon Pulse's market headline of October 12 reads "Euro Markets: EUAs, UKAs rise to highest since January amid rising energy, EU-UK summit optimism". We have not read the report and cannot confirm the level. In the auctions, €86.28 is the highest result of the quarter so far but below the €86.44 of September 14.
European Aluminium wants the phase-out put on hold
European Aluminium, the aluminium industry association, asked on October 12 for the free allocation phase-out to be put on hold, which goes further than the Commission's slowdown. Its one-pager asks to "Put the free-allocation phase-out on hold immediately until the necessary CBAM fixes are in place, CBAM is proven effective and a comprehensive export solution exists." It argues that "CBAM has not yet proven that it can provide equivalent carbon-leakage protection."
This is an industry position, not a Council or Parliament text. The CBAM aluminium page sets out today's rules for the metal.
What importers should do
Nothing changes for 2026 and 2027 imports, so budget on the law in force and watch the December Council.
- 2026 and 2027. The CBAM factor is 97.5% and 95% under both texts. Certificate sales open on February 1, 2027; the first declaration is due on September 30, 2027.
- 2028 onward. Keep the current-law schedule as the base case and treat the proposal as a lower-cost scenario. The CBAM cost calculator gives current-law figures for your goods.
- Q4 2026 imports. Use €84.76 as a working figure; it moves with every auction until the official price of January 4, 2027.
- Dates to watch. A first Presidency compromise text, the December Environment Council and Parliament's position. The CBAM timeline records confirmed dates.
Certificate price alerts and the regulatory changes that matter. Get weekly updates on what happens regarding anything CBAM-related. No spam, unsubscribe anytime.
We store only your email address for these alerts. Privacy policy