The European Commission has warned that proposed changes to the EU Emissions Trading System's intervention rules would weaken the bloc's carbon market, and it has criticized plans to broaden exemptions for installations receiving free allowances.

Rosalinde van der Vlies, a senior Commission official, told the European Parliament's environment committee that alterations to the mechanism for addressing excessive carbon-price fluctuations could reduce the effectiveness of the ETS. The remarks, reported by Argus Media, came in response to a draft report from German center-right lawmaker Peter Liese, presented to the Commission ahead of internal parliamentary negotiations on a pending reform package.

"Trying to engineer a carbon price through frequent market intervention will lead to less cost effectiveness and will reduce market and investment predictability," van der Vlies said.

Free allowance conditionality dispute

Van der Vlies also opposed a proposal to expand exemptions from conditionality requirements attached to free ETS allocations. The draft would spare installations ranked among the 40% most efficient in their sector from those conditions.

For industrial operators covered by the ETS, the stakes are direct. Free allocation has functioned as the principal buffer against carbon costs for energy-intensive sectors, and any loosening of the strings attached to those allowances shifts compliance economics for the installations concerned. The Commission's position signals resistance to narrowing the obligations that come with free tonnage.

Liese's broader package

Van der Vlies broadly welcomed Liese's initiative, calling it a "very solid report," and Liese himself said he remained open to improvements.

Liese urged lawmakers to move quickly, as EU member states seek to establish their position ahead of an upcoming meeting of climate and environment ministers. He also called for more effective use of ETS revenues, arguing that too much of the money raised had not been used efficiently.

On aviation, Liese backed a 5,000-kilometer (3,107-mile) approach to the ETS, saying broader inclusion of flights to the U.S. and Asia could have prompted serious responses from other countries. He supported the Commission's approach to maritime transport while calling for measures to protect European ports against evasion.

Waste incineration timing

The draft report carries a specific position on a material stream of direct relevance to waste-sector operators: Liese said adding waste incineration to the ETS in 2028 would be premature, and he supported the Commission's proposed 2034 timetable.

That position matters for incinerator operators and municipal waste authorities across the bloc. Extending the ETS to municipal waste incineration would place a carbon cost on each tonne of waste burned, altering the economics of energy-from-waste relative to recycling and landfilling. A 2034 start date gives operators a longer horizon to price in allowance costs and adjust gate fees; a 2028 date would compress that adjustment period considerably.

Dutch S&D lawmaker Mohammed Chahim argued that neither the earlier nor the later proposal would meet existing requirements under the EU Climate Law.

Far-right Patriots lawmaker Mathilde Androuet called for slower emissions reductions and opposed extending the ETS to waste incineration and international flights.

Legislative calendar

Lawmakers can submit amendments until October 6. The environment committee is due to vote December 1, with a plenary vote expected later that month.

The committee vote on December 1 will determine which version of the intervention rules, conditionality exemptions, and the incineration entry date advance to plenary — and whether the Commission's 2034 timetable for municipal waste incineration survives intact.