EU proposes Swedish pulp and paper plants rejoin ETS with no free CO2 allowances

The European Commission has proposed returning 26 Swedish pulp, paper and cardboard installations to the EU Emissions Trading System from January 2027, with no free allowances granted. The move follows a request from the Swedish government and would require the affected plants to buy all their carbon allowances on the open market. The proposal comes amid a wider EU ETS reform debate over free-allowance rules and use of carbon market revenue.

Why this mattersFull carbon-cost exposure for Swedish pulp and paper producers raises compliance costs and could widen the competitiveness gap with mills still receiving free allowances.

• 26 Swedish pulp, paper and cardboard installations affected
• Proposed re-entry into the EU ETS from January 2027
• No free allowances to be granted to the installations
• Proposal made at the request of the Swedish government
• EU member states had separately proposed a 40% increase in free ETS allowances under the fallback benchmark

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