Spain Approves Final Free Allocation of Emission Rights for 2026-2030 Industrial Decarbonisation
The Spanish Government has approved the final free allocation of greenhouse gas emission rights to industrial installations for the period 2026-2030. This decision was made by the Council of Ministers upon proposal from the Ministry of Industry and Tourism, the Ministry of Economy, Trade and Business, and the Ministry for Ecological Transition and Demographic Challenge (Miteco).
It covers 664 fixed installations across all industrial sectors, with an average annual free allocation of 38.1 million emission rights during this period. This represents a 1.6 percent reduction compared to the last year of the previous allotment, 2025. Consequently, the industry sectors deficit in free emission allowance coverage is projected to increase from 20.0 percent to 21.3 percent. Electrical generation will not receive free allowance allocations, aligning with ongoing policy since 2013 aimed at reducing industry emissions.
The downward revision of free emission allowances reflects the EU s commitment to more ambitious climate objectives. During 2026-2030, two simplified regimes are available within the Emission Trading System (ETS) for small emitters, easing administrative burdens. Installations operating under these regimes receive 3.3 million allowances for the entire period, subject to reintroduction into the general regime if thresholds are exceeded.
The EU Emissions Trading System serves as Europe s primary tool for incentivising reductions across industry, electricity generation, aviation, and maritime transport. Since its inception in 2005, Spain has reduced emissions by 62 percent, showcasing the effectiveness of market-based climate policies.
European regulations mandate that a portion of emission rights are allocated free of charge to regulated entities, preventing excessive costs and the risk of industry relocating to countries with weaker environmental standards. These allocation rules are harmonised across the EU.
Recently, the European Commission proposed reforms to the ETS for 2031-2040, including modifications to rules governing free allocations in the current period 2026-2030. These proposals aim to tighten emissions controls and support Europe's climate targets more effectively.