EU ETS plans could give Icelandic firms more time

Proposed changes to the EU emissions trading system could give some Icelandic companies more time to invest in emissions cuts, while bringing more aviation operators and smaller ships under the rules, mbl.is reports. The plans also include continued support for sustainable aviation fuel use in Iceland.

Einar Halldórsson, team leader at the Environment and Energy Agency, said the proposals would make significant changes to the system’s scope and support for businesses. Their main aim is to increase flexibility and encourage investment in climate-friendly solutions without abandoning long-term emissions-reduction goals, he said.

The European Commission presented the proposals this summer for the fifth phase of the emissions trading system, which is due to run from 2031 to 2040. The changes are intended to align the system with the EU’s 2040 climate targets while supporting the competitiveness of European industry.

Among the proposals are a slower annual reduction in the number of emissions allowances after 2030 and an extension of free allowances for certain industries. In return, companies would face greater investment requirements for emissions-reduction projects. The plans also envisage more financial support for industrial decarbonisation.

The system’s scope could expand to include more aviation operators, smaller ships and waste incineration plants. The proposals would also make it easier to introduce technologies such as sustainable fuels, carbon capture and permanent carbon storage.

Icelandic businesses could gain new opportunities to apply for grants and financing for emissions-reduction projects. The plans include increased funding for the EU Innovation Fund and a new fund for industrial decarbonisation, as well as dedicated support for sustainable fuels and the energy transition in aviation and shipping.

Halldórsson said the proposals could also create opportunities for Icelandic companies working in carbon capture and permanent carbon removal, including Carbfix. The plans include increased support for such technologies and would recognise permanent carbon removals within the emissions trading system.

The proposals are still under consideration in the EU. The Commission is accepting feedback from individuals, companies and other interested parties through its Have Your Say consultation until 3 November 2026.