Reforming the EU Emissions Trading System: three pillars for a fair and effective Phase 5
With the Commission’s ETS Directive revision expected in July 2026, the European starch industry sets out its priorities on carbon market architecture, free allocation, and the unresolved question of export carbon leakage.
The EU Emissions Trading System is the cornerstone of European climate policy, and it is about to be reopened. The Commission’s July 2026 proposal to revise the ETS Directive will set the parameters for Phase 5 (2031-2040), making this the critical window for political decision. Starch Europe sets out three priorities — on carbon market stability, free allocation methodology, and export carbon leakage — grounded in the realities of the bioeconomy.
The European Starch Industry asks for:
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A fully-fledged carbon price corridor, underpinned by a strengthened and redesigned Market Stability Reserve, should replace the current reactive posture, providing both a floor and ceiling that markets and long-term investors can price into decisions.
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The benchmark methodology must better reflect technology and market reality. The feasibility of energy source substitution, the commercial availability of scalable low-carbon alternatives, and the exceptional macroeconomic conditions facing European manufacturers since 2022 should all be factored into the next benchmark revision.
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The framing of export carbon leakage as a “residual issue” to be addressed later is no longer tenable. The 2026 ETS revision is the opportunity to build a durable solution into the Directive, not to defer it to a future instrument that may never materialise.
Read the full position here:
