One hundred billion euros. That is the size of the Industrial Decarbonisation Bank (IDB) contained in the Emissions Trading System (ETS) overhaul that the European Commission presented on July 17, 2026 local time. In Korean won it comes to roughly 160 trillion won, and the announcement does not state the date of the exchange rate used for the conversion. Depending on the source, the figure is described either as a fixed amount or as a ceiling.
The core of the overhaul lies in changing the character of the ETS. The design moves a system that had been a regulatory device for holding down emissions into a policy and investment platform that draws in industrial decarbonisation investment. Member states are placed under an obligation to spend half of the revenue collected from emissions allowance auctions on industrial decarbonisation investment.
The EU ETS began in 2005. Greenhouse gas emissions from the industries covered have fallen to roughly half the level at the time of its introduction. Even with that record, the background cited for the Commission's redrawing of the framework includes energy prices that soared after the Russia-Ukraine war, along with the industrial support policies that the United States and China are pouring out. Underlying it is the recognition that a reduction record alone cannot keep manufacturing inside the bloc.
The first item export manufacturers need to check is the schedule for free allowances. The point at which free allowances are eliminated entirely in sectors covered by CBAM had been set for 2034, and this overhaul pushes that deadline back four years to 2038. Continuing to receive free allocation comes at a price. A conditional approach applies as a principle, under which a company must draw up a decarbonisation investment plan and carry it out for its allocation to be maintained.
The 2040 reduction target is set at 90%. The baseline year is not stated in the announcement. Apart from the target figure, the overhaul also contains provisions allowing a certain level of emissions even beyond 2040 and extending the period during which free allowances are granted.
The scope of application also widens. Shipping and aviation come under the system, and there is also a description that the waste sector is included. In shipping, the threshold comes down.
Where until now only large vessels of 5,000 GT and above were caught, the plan is to bring in small and medium vessels of the 400 GT class in stages. A measure formally incorporating carbon removal technology into the ETS was also included.
For Korea's steel, chemical and fertiliser industries, two forces apply at once. With the free allowance period extended, the carbon costs to be paid immediately are held down to some degree. Conversely, conditional free allocation adds the homework of an investment plan. Companies with production bases inside the EU such as Samsung Electronics, Hyundai Motor, SK and LG are mentioned as having room to become eligible for support from the Innovation Fund or the IDB, but the support requirements and screening procedures have not been settled.
Oh Tae-hyun, a senior researcher at the Korea Institute for International Economic Policy, also gave his view on this overhaul.
Descriptions of the announcement of the overhaul differ. Some record it as a stage at which the Commission has put forward a proposal, and others record it as settled. With the procedure of passing through the European Parliament and the Council still remaining, it is early to assume the final text will look as it does now. How the IDB's funding will be raised and over how many years it will be disbursed, and by when an investment plan must be submitted under conditional free allocation and what penalties follow a failure to meet it, are also parts to be filled in by follow-up documents.
What export companies can confirm now is only the outline of the policy. Going beyond demanding emissions reductions, the EU has written into the system that half of emissions allowance auction revenue must be spent on industrial decarbonisation investment. Whether free allocation is maintained and whether a company qualifies for fund support depend on investment inside the bloc and on implementation plans.
