EU Carbon Markets Under Siege: ETS Political Battle, CBAM D-9, and CRCF Removal Certification

Europe's carbon market faces its most significant political test in years. Ten EU member states have demanded that the European Commission accelerate its planned review of the Emissions Trading System to end of May 2026, while simultaneously pushing for near-term measures to reduce carbon costs for industry.

The ETS Divide: Industry vs. Climate Ambition

The "Friends of Industry" coalition, led by Italy and including Austria, Czech Republic, Croatia, Greece, Hungary, Poland, Romania, and Slovakia, argues the ETS imposes an unfair cost burden that undermines European competitiveness. Italy's industry minister has gone further, calling for a full suspension of the carbon market until reforms are implemented.

Eight pro-climate nations — Denmark, Finland, Luxembourg, Portugal, Slovenia, Spain, Sweden, and the Netherlands — have responded with a non-paper defending the ETS as the cornerstone of EU climate policy. The ECB has meanwhile revised its ETS price outlook downward for 2026–2028, with benchmark EUA prices having dropped below €70 following Italy's suspension call.

CBAM: The March 31 Authorization Deadline

With just nine days until the CBAM authorized declarant deadline, EU importers of steel, aluminium, cement, fertilisers, hydrogen, and electricity face a critical compliance milestone. Any importer bringing more than 50 tonnes of CBAM-covered goods into the EU must apply for authorized declarant status by March 31 under the Omnibus simplification rules.

Throughout 2026, authorized declarants must collect verified emissions data from non-EU producers, using either actual verified values or EU default values. The first declarations and certificate surrenders follow in September 2027.

CRCF: Europe's Carbon Removal Certification Takes Shape

The EU adopted the delegated act for permanent carbon removal activities on 3 February 2026, covering three pathways: Direct Air Capture with Carbon Storage (DACCS), Biogenic Emissions Capture with Carbon Storage (BioCCS), and Biochar Carbon Removal (BCR). The Commission will begin accepting certification scheme applications in early 2026, with the first certified removal units expected by 2026/2027.

For the carbon removal market, this regulatory framework creates a structured demand signal. Project developers who can demonstrate rigorous, continuous monitoring through digital MRV systems will be best positioned to secure certification and access premium pricing in both voluntary and compliance markets.