Government is in favour of reforming EU emissions trading

The Government supports for the most part the Commission proposal concerning the development and expansion of the EU emissions trading. On 1 October 2026, the Government submitted a Union communication to Parliament where it outlines its position concerning the Commission proposal for the reform of the Emissions Trading Directive. 

The European Commission gave a proposal on the reform of emissions trading on 17 July 2026. The EU’s target is to reduce emissions by 90 per cent from the1990 levels by 2040. The aim of the reform is to bring the system in line with the 2040 climate target.

The aim is also to increase flexibility in emissions trading so that the climate targets can be reached in a way that is cost-efficient and strengthens the industry’s competitiveness. The proposal tries to find a balance in a situation with conflicting pressures related to geopolitics, competitiveness and climate change. There is the risk that the steering impact of emissions trading will be weaker if the total numbers of emission allowances are reduced more slowly than now.

Inadequate emission reductions in the emissions trading sector would increase pressures to reduce emissions more in the non-emissions trading sectors, such as agriculture and road transport. 

“Emissions trading has reduced emissions cost-efficiently and boosted investments in clean energy. It is important to develop the system in a way that maintains a predictable investment environment and continues to encourage operators to develop and adopt low-emission solutions. Finnish companies are among the leaders in emission reductions, which means that a well-functioning system is a competitive advantage for us,” Minister of Climate and the Environment Sari Multala says.

Decrease in the numbers of emission allowances encourages to invest in low-emission solutions