Reuters has published some detail of a draft European Commission proposal to toughen the EU Emissions Trading System, a final version of which is to be presented this month. Amongst the features of the proposal are:

• A one-off cut in the number of permits (on top of the annual decreases in permits that are usual, but which would decrease more rapidly)
• The ending of free permits for producers of steel, cement, aluminium and fertiliser. This would be because those industries would be protected, in theory at least, by a carbon border tax also to be instituted by the EC. The abrupt ending of free permits in these industries would be strongly opposed by those industries, given they have already argued that a transition period is needed. (The EC, however, may find it legally difficult to provide free permits and a carbon border tax, as this might be found to break World Trade Organisation rules.)
• A new separate trading system for transport (including shipping) and heating systems in buildings.

All eyes will be on the EC when it unveils the final version of its proposal.