The EU will provide industries with additional free CO2 permits.

The European Commission has proposed plans to allocate more free emissions permits to industries over the next few years, potentially saving companies 4 billion euros ($4.68 billion) in CO2 expenses, according to an internal EU document reviewed by Reuters on Monday.

The EU's carbon market is the primary mechanism for managing CO2 emissions, requiring industries to purchase emissions permits when they pollute. There has been increasing political pressure from member states concerned about Europe's declining economic competitiveness, and several heavy industries are urging Brussels to provide more free CO2 permits to alleviate compliance costs.

An internal presentation by the Commission, reviewed by Reuters, revealed that Brussels intends to begin factoring in companies' indirect emissions when calculating the number of free CO2 permits allotted to industries from 2026 to 2030. This would replace the current method, which only considers direct emissions.

The proposed change would result in industries receiving approximately 4 billion euros worth of additional free emissions permits, according to the Commission document. The plan addresses industry concerns by utilizing existing flexibilities within the EU's carbon market regulations.

The Commission is set to present the draft plans, which may still be subject to change, early this month before finalizing a version in June. A spokesperson for the Commission declined to comment on the document.