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ARTICLE · 05 AUGUST 2026

International Carbon Credits Under The Proposed EU ETS Revision And CBAM Implementing Regulations

A&O Shearman
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The European Commission's proposal to revise the EU Emission Trading System introduces a significant new element: the potential purchase of up to 260 million international carbon credits. This development, alongside parallel provisions in the Carbon Border Adjustment Mechanism, signals a cautious but meaningful shift in how the EU approaches international carbon credits. Understanding these distinct treatment mechanisms has critical implications for ETS-covered operators, EU importers, and international tra

BelgiumEnvironment
Gauthier van Thuyne
Gauthier van Thuyne
Alexander Pirard
Alexander Pirard
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1. Introduction

On 17 July 2026, the European Commission published its proposal to revise Directive 2003/87/EC (the EU ETS Directive), formally titled “proposal for a directive amending Directive 2003/87/EC and Decision (EU) 2015/1814 as regards driving competitiveness and cost-effective decarbonisation” (document reference 2026/0212 (COD)) (the EU ETS Proposal).1 In an article published in July,2 we have examined the proposal to revamp the EU Emission Trading System (EU ETS) as a whole.

In this article, we will examine one of the features of the EU ETS Proposal in more detail, namely the possibility that would be granted for the Commission to purchase up to 260 million international credits (International Carbon Credits or ICCs). Furthermore, we note that the Commission is also proposing that ICCs may play a role under the EU’s Carbon Border Adjustment Mechanism (CBAM) established under Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023

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