Ukrainian missiles reportedly struck a factory in the city of Oryol on 23 October, with OSINT projects reporting that the target was the Proton electronics plant, which produces components used in Russian weapons systems.
The strike comes amid Ukraine’s broader campaign to target Russian military production facilities and other infrastructure supporting Moscow’s war against Ukraine. Ukrainian strikes on such facilities aim to weaken Russia’s ability to manufacture and maintain the weapons it uses in its invasion.
The plant reportedly supplies electronic components for Iskander-M ballistic missiles, which Russia regularly uses to attack Ukrainian cities, as well as other weapons systems, including the Pantsir-S1 air defense system.
The strike could disrupt production supporting Russia’s war effort. Photos show extensive damage to the building. Information about casualties remains unclear.
Reports say a Ukrainian missile strike hit the Proton electronics plant in Russia’s Oryol on 23 October.
The facility reportedly produces components for Iskander-M ballistic missiles used in attacks on Ukrainian cities, as well as other Russian weapons systems.
Plant reportedly produces components for Russian weapons
Proton JSC manufactures semiconductor devices, LEDs, and electronic components for industrial and specialized equipment. According to Exilenova+, the plant’s products are used in the production of Iskander-M ballistic missiles, S-71 Kover missiles, and the Pantsir-S1 air defense system.
Exilenova+ reported that the plant was struck by Storm Shadow cruise missiles. The weapon type has not been independently confirmed, and the extent of damage to the facility remains unknown.
Russian authorities confirm strike on factory
Oryol Oblast Governor Andrey Klychkov announced a missile threat in the region before reporting that missiles had struck a factory in Oryol’s Sovetsky District, according to Liga.net.
Residents reported explosions, a fire in one part of the city, and columns of smoke rising over Oryol, according to local reports cited by OSINT projects Exilenova+, Supernova, and Astra.
Show features live chat sessions with breeders, a podcast and updates on dogs’ progress from birth to weigh-ins
A 24-hour Finnish TV show dedicated entirely to the live progress of a dog and her six newborn puppies is drawing millions of viewers.
As well as a 24-hour webcam, Pentulive (Puppy Live) includes live evening chat sessions with the dogs’ breeder, a podcast and an instant notification service that updates followers on the puppies’ progress – from their birth to weigh-ins and first nail trims – for eight weeks.
Ukraine's Cabinet has opened the construction of underground arms production space to private investors, Prime Minister Serhii Koretskyi announced on 22 October, saying the rule applies from that day. A second decision eases imports for partner-funded weapons production.
Koretskyi said the change would add more of the space arms makers need, especially as Russian strikes intensify. On 9 December 2025, the Defense Ministry reported that more than UAH 1.5 billion (about $36 million) in budget support had let war-damaged defense firms restore operations. At the time, the ministry planned to relocate or duplicate the most critical plants, and underground complexes were under construction. The new model puts no additional burden on the state budget, Deputy Defense Minister Hanna Hvozdiar said. The bill still lands somewhere, though. Defense firms will buy, lease, or take the space for use, and companies working on state contracts are among those eligible. If they pay developers out of state-contract revenue, part of the cost could come back to the budget.
Developers build, arms makers move in
The changes to Cabinet resolution No. 1494 give private investors a simplified route to construction and permits, the ministry said. Developers can build protected facilities with their own or raised funds. Deadlines, terms of use, and the handover are set in a contract between investor and defense firm. The mechanism covers new sites as well as moving or expanding existing production. If a firm gets only part of a facility, that part must be at least 25% of the facility's total area and fit for production.
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One year of Ukrainian arms exports, and industry has questions: how much army gained, where Berlin office is, who joins joint ventures
Developers must sign deals with, among others, residents of Defence City, Ukraine's special legal regime for arms makers, holders of state defense contracts, and firms the ministry designates as critical.
Tax break for partner-funded arms production
Components for weapons production that international partners pay for will enter Ukraine free of import duty and VAT, Koretskyi said. He added that customs inspection and clearance would be simplified and sharply shortened through a "single window."
Heineken has warned British bars and pubs that the boom in popularity of weight-loss drugs could lead to a fall in sales of beer and cider.
The world’s second-largest brewer sent a presentation to British hospitality customers earlier this month that said the use of GLP-1 medication – such as Ozempic and Wegovy – could reduce the desire to drink alcohol. This in turn could result in “fullness and fewer serves” of pints in pubs and bars, it added.
The European Commission is preparing a new trade-defence instrument that would allow the European Union to restrict access to its single market more rapidly when large volumes of low-priced imports threaten domestic manufacturers.
Commission President Ursula von der Leyen outlined the initiative during a speech to the European Parliament in Strasbourg on Wednesday, 21 October, following discussions among EU leaders over growing global trade imbalances.
The proposal would form part of a wider package addressing economic dependence on foreign suppliers and attempts by third countries to exert commercial pressure on individual EU member states. Although the Commission has not yet published detailed legislation, the announcement signals Brussels’ intention to expand its capacity to intervene in international trade disputes.
European industries seek protection
European manufacturers have faced increasing competition from imported products in sectors including chemicals, machinery, vehicles, steel and industrial components.
Much of the concern centres on China, where extensive manufacturing capacity and government support have enabled companies to expand their presence in international markets.
European producers argue that differences in subsidies, production costs and market access place them at a competitive disadvantage.
According to the European Commission, the EU’s goods trade deficit with China exceeded €1 billion per day in 2025.
Von der Leyen has described the imbalance as unsustainable and argued that European trade policy must respond more effectively to market distortions.
During her 21st October address to Parliament, she confirmed that the Commission was working on additional safeguards intended to address sudden increases in imports affecting European businesses.
The proposed measures follow a Franco-German initiative calling for stronger instruments to counter systemic economic imbalances.
France and Germany have urged Brussels to act more quickly where existing trade investigations and enforcement procedures prove insufficient.
China trade negotiations produce limited progress
The announcement follows recent negotiations between Brussels and Beijing aimed at reducing tensions over industrial competition.
Earlier this month, the two sides reached an arrangement restricting Chinese hybrid vehicle exports to the European market.
As EU Today reported on 13rd October, the agreement established an annual ceiling of 350,000 vehicles, potentially reducing Chinese manufacturers’ expected market access.
However, European officials acknowledge that restrictions covering a single automotive category cannot resolve the wider trade imbalance.
Other industries remain concerned about Chinese production capacity, including chemicals, machinery and manufactured components.
Beijing has warned against further unilateral European restrictions, arguing that protectionist measures could damage commercial relations.
The Chinese authorities have also demonstrated a willingness to pursue trade investigations involving European products.
As previous EU Today coverage established, China opened an anti-dumping investigation into an EU chemical product in early October, adding to existing commercial disputes.
Further European restrictions could therefore prompt additional Chinese countermeasures affecting exporters from member states.
New instrument would strengthen EU response
The proposed market-access mechanism is intended to give Brussels greater scope to act when existing safeguards cannot address economic threats quickly enough.
However, its legal structure, enforcement thresholds and relationship with existing anti-dumping and anti-subsidy legislation have not yet been specified.
The EU already possesses several trade-defence instruments, including duties against unfairly priced or subsidised products and safeguards designed to protect industries from damaging import surges.
Those mechanisms generally require formal investigations and evidence demonstrating the conditions for intervention.
The new proposal could introduce a faster response, but questions remain over how any restrictions would comply with international trade obligations and the EU’s commitments under World Trade Organisation rules.
Member states would also have to consider the consequences for European businesses that depend on imported materials, components and finished goods.
Reducing dependence on foreign suppliers
The Commission’s strategy extends beyond restrictions on imports. Von der Leyen confirmed that a separate initiative, known as DiversifyEU, would be presented in December.
The programme is intended to help European companies reduce excessive dependence on individual suppliers and countries, particularly where critical raw materials and strategic technologies are involved.
The Commission also plans a solidarity mechanism designed to assist member states and industries facing external economic coercion or retaliation. Such arrangements could become relevant when a foreign government targets exports from a particular member state in response to an EU policy decision.
The initiative follows growing concern that Europe’s access to strategically important industrial supplies can be disrupted through export controls or political disputes.
Difficult negotiations ahead
The Commission will still have to translate the proposed measures into legislation and secure sufficient political support among member states and the European Parliament.
National governments have different commercial relationships with China and varying levels of dependence on imported industrial goods. Countries with substantial export markets in China may be particularly concerned about retaliation, while manufacturers facing foreign competition are likely to press for faster intervention.
The Commission must also determine whether new trade powers should be exercised centrally in Brussels or require additional approval from national governments. For European industry, the immediate question is whether the new mechanism can provide effective protection without increasing production costs through restrictions on essential imports.
The Commission’s forthcoming legislative proposals will establish how far the EU intends to move towards a more interventionist trade policy.
Case filed in 2022 by patient unable to afford medicine leads to cap on drug prices for millions who face ruin if diagnosed
The Indian government has moved to reduce the price of cancer drugs after a retired bank clerk took her case to the supreme court.
From next month, 137 cancer drugs in India will be cheaper as the government tries to tackle the tragedy of poorer patients either forgoing treatment, selling land or falling into debt to meet the high cost of some medicines, which are making large profits for hospitals and pharmacists.
Official forecasts show country will meet energy demand by paying high prices to secure imports
Great Britain is expected to pay some of the highest energy costs in Europe this winter as its reliance on imports to ensure a steady supply is forecast to deepen.
Energy system operators have said the country will have enough gas and electricity to meet demand over the coldest months – in part because of paying higher market prices than neighbouring markets to secure imports.
Of all the arguments for protectionism, the infant industry argument probably has the strongest theoretical appeal. By protecting a new industry from its more developed foreign competition, the story goes, tariffs give domestic producers the time to grow, learn, and become efficient enough to stand on their own. Domestic consumers feel the short-term pains of higher prices, but they enjoy the long-term gains of job growth and lower prices as the new industry blossoms.
It's no secret that tariffs have driven significant price increases over the last year and a half. A study from the New York Federal Reserve finds that tariffs "contributed 2.9 percentage points to goods price inflation" and that without tariffs those prices would have slightly declined. Tariff defenders, looking for a new reason to claim these higher prices are only temporary, have reimagined the infant industry argument. Now it's being used to support trade barriers in industries that are over a century old, but the promise is exactly the same: Domestic firms need the protection so they can compete, innovate, and cut costs until prices come back down even further than they were before the tariffs.
Michael Brendan Dougherty recently made such an argument in National Review, arguing that "tariffs can, over time, bring prices below where they started." When economist Don Boudreaux called the argument "bizarre," Dougherty replied that critics had failed to acknowledge the dynamic process by which markets respond to tariffs "by adapting and cutting costs." Although he is light on specific details, he posits that the changed incentives of a "paradigm shift" in tariff policy will spur domestic competition, leading to the theorized price reduction. Of course, firms would still respond to the dynamic processes of domestic competition without a tariff wall, but the point stands.
From there, the reworked infant industry argument becomes the standard version advanced more than two centuries ago by Alexander Hamilton and his disciple Friedrich List. When Hamilton made this claim in 1791, his argument may have seemed suitable for a new nation seeking to firm up its economy and security against established European powers.
Others at the time pointed out that special interest groups—a manifestation of the "violence of faction" so thoroughly dissected in theFederalist Papers—had already begun to coalesce around the fledgling iron industry in Pennsylvania, clamoring for protective tariffs. Two years earlier, James Madison had warned about a "premature policy of stimulating manufactures" driving tariffs too high. In the end, Hamilton recommended and Congress enacted a far more moderate tariff schedule than his theoretical musings portended. American iron manufacturers received a consolation prize of a higher tariff on their competitors than the rate for most general imports. Hamiltonians have been touting the infant industry argument ever since.
Nearly 250 years later, those same infants apparently have yet to advance into adulthood. Steel, the direct successor to the founding-era iron manufacturers, remains a singular focus of President Donald Trump's protectionist tariff policies, just as it was under former President Joe Biden. And former President George W. Bush before him. Indeed, steel has been a recurring beneficiary of protectionism for most of America's existence.
This extended period of protectionist infancy suggests that the argument needs a new name. We propose the "Peter Pan industry argument" for companies that never grow up because tariffs make sure they never have to.
The question tariff advocates rarely ask is: Why do some American producers have higher costs than foreign rivals even in the face of lower-cost foreign competition? The answer comes down to specific rules and choices within particular firms and industries. Tariffs, and protectionism in general, address none of these. No industry illustrates this like steel, but it is far from the only one.
In 1947, United Steelworkers won a contract provision known as Section 2-B. Among other things, this barred mill managers from changing established work practices unless new technology required it. Steel companies tried to get rid of this in 1959, finding it difficult (given union incentives) to establish that technology required change. In response, 500,000 steelworkers went on strike for 116 days. This strike sent buyers abroad, causing 1959 to be the first year the U.S. imported more steel than it exported. One of the then-new technologies that was delayed was basic oxygen furnaces, which could produce steel far faster and cheaper than the open-hearth furnaces that were so common. In 1965, only about 17 percent of steel made in the U.S. was made using the basic oxygen furnace. Japan produced 55 percent of its steel with this faster, more efficient method.
Change finally came from a steel customer. Vulcraft, a maker of steel joists, grew tired of paying Big Steel's prices and waiting for Big Steel's deliveries. In 1969, free from steel unions and preconceived notions, the company looked for new steel-producing technologies and found the answer in the electric arc furnaces that had been adopted in much of the world throughout the 1950s and '60s. Vulcraft's parent company later renamed itself Nucor, and minimills like the ones it pioneered now make most of America's steel.
So the modern steel industry was built by a frustrated steel buyer who found a way around protected companies. In other words, the U.S. steel industry has lagged behind the technologies found around the world.
We could go on, but the broad point here is that the "relatively higher domestic production costs that made the tariff 'necessary' in the first place," as one critic put it, are often the result of preventing competition in the first place. It's odd to suggest that further preventing competition through tariffs will somehow alleviate the ills of already-prevented competition.
Tariff advocates fail to acknowledge that the ability to import steel also comes with the benefit of access to cheaper steel for steel-using industries, such as manufacturing. A 50 percent tariff on steel further closes the release valve that imported steel offers. Buyers of steel are then left to purchase more of the more expensive domestic steel. Because new steel mills take years to bring online, this causes delays and longer delivery times for manufacturers.
We don't have to wonder what happens when a country lowers its tariffs on materials used by manufacturers. India did this in the '90s, and researchers found that newly available inputs accounted for 31 percent of the new products that Indian manufacturers introduced. And what happens when the U.S. imposes tariffs on steel? Downstream U.S. firms become less competitive. This is why American businesses clamor for exemptions to tariffs, especially for tariffs on materials like steel.
Perhaps all this could be forgiven if tariffs advanced national security concerns, as tariff advocates assert. They point out that an adversarial nation could cut off supplies of critical materials during wartime and cripple America's ability to defend itself. Unfortunately, tariffs fail there too.
First, this conflates production with access. While domestic production does ensure domestic access, access can be secured without production. In the case of steel, the Commerce Department reports that in 2025, the U.S. imported steel from 79 countries, with Canada being our top foreign supplier. The top 10 sources of steel are responsible for 77.8 percent of America's steel imports. None of those countries were considered adversaries—at least not until the tariff crusades pushed these friends away. What's more, according to the American Iron and Steel Institute, only 23 percent of finished steel in the U.S. was imported in 2024. Far from being exposed to foreign states' whims, American access to steel is incredibly resilient.
Second, this view ignores the positive effects of trade and globalization on national security. The Center for Strategic & International Studies finds that increased trade between countries reduces the likelihood that they'll go to war against one another. Globalization helps ensure that domestic access continues unabated should war break out, thanks to the diversity of trading partners.
When Hamilton made the infant industry argument, he at least assured us that the industry would at some point advance to adulthood and stand on its own. Steel, like so many other Peter Pan industries, has proven Madison right. These industries have refused to grow up, and it's time to stop pretending that tariffs will fix that.
Ukraine now builds far more weapons than it can afford to buy. A year ago, it promised to sell the surplus abroad and turn the proceeds back into its own army. However, 12 months later, that promise has barely materialized: a state fee of up to 30% is pricing Ukrainian arms out of foreign markets, and no one can say how much the army has actually gained, said Ihor Fedirko, executive director of the Ukrainian Council of Armorers.
President Volodymyr Zelenskyy announced the resumption of controlled weapons exports in October 2025, resting it on four promises: 1) sell what Ukraine makes beyond its own needs, 2) channel part of the proceeds into a special fund for the army, 3) open export offices in Europe and the US, and 4) establish joint ventures abroad.
The surplus is real: Ukraine's defense output is projected to reach $55 billion in 2026, far beyond what the state can finance. A year on, Fedirko checked each promise in turn.
1) Export of surpluses: rules that strangle businesses
On 1 July 2026, the government approved rules for controlled arms exports. They shortened the maximum application review period from 90 to 30 days, but also introduced an export fee: 20% for finished products and technologies, and 30% for components. For finished products exported under the special procedure, the contract value must be at least $334,000.
In September, the Ukrainian Council of Armorers, together with other associations, proposed a zero rate, no advance collection of the fee, refunds for deals that fall through, and simplified test shipments. The industry was promised that its amendments would be taken into account and that the resolution would be rewritten.
Even in early October, however, the rules still needed work. According to Fedirko, the new mechanism has effectively not started working. Whether it can bring in additional funds for defense depends on how acceptable the export terms are to manufacturers.
Fedirko says, though, that judging by current decisions, the state intends to keep the export fee.
“The industry is ready to discuss its contribution to defense financing. But the rate must be economically justified,” he says.
2) Procurement for the Ukrainian military: balance is only being established
He adds that the Ukrainian Council of Armorers intends to push for a rate significantly lower than 20%, one that would let companies fulfill contracts and invest in production.
With such high rates, Fedirko says, the competitiveness of Ukrainian weapons on foreign markets is in question, as is the ability to send even small test batches to potential buyers.
“The fundamental requirement is post-payment: after the contract has actually been fulfilled and the manufacturer has been paid. A company should not pay the state in advance a share of income it has not yet received,” he says.
He added that, given all this, the real export figures remain unclear, as does how much exports have actually brought the military.
“The military and manufacturers must feel the benefit of exports. I sincerely hope that next year will bring much better results,” he says.
In addition, on 12 October, the Ukrainian Parliament passed bill No. 15400 in the first reading. It provides for crediting the export fee to a special fund directed to the Ministry of Defense: 50% for the procurement, modernization, and repair of weapons and equipment, and 50% for the pay of Armed Forces personnel.
The bill has not yet been adopted, but Fedirko says he expects “final adoption and launch of the mechanism.”
3) Export offices: offices in Germany and Denmark
On 3 November, the Ukrainian government named the first cities for export offices: Berlin and Copenhagen. On 15 December, it again spoke of preparing an office in Berlin. In reality, Fedirko says he does not know the office’s status, and it likewise remains unclear how companies can apply to it and how many contracts it has helped close.
4) Joint ventures abroad: There are concrete results in this area
According to Fedirko, eight joint ventures have been created, five of which are already supplying products to Ukraine. He stresses that this is the result of work by Ukrainian companies, foreign partners and the state, and that it deserves recognition.
As early as February 2026, the authorities spoke of plans to create ten joint ventures in Europe within a year. At the same time, they announced Quantum Frontline Industries in Germany, with a planned annual capacity of 10,000 drones for Kyiv.
Beyond the number of ventures and deliveries, however, it is important to understand how other manufacturers can join the Build with Ukraine program.
“Who accepts applications, by what criteria are decisions made, and what support does a company receive?” Fedirko asks.
In other words, joint ventures are already delivering results, but the rules of participation and the state support mechanism must be clear to companies that want to develop production abroad.
A series of lawsuits has created a new de facto regulatory regime as courts order companies like Meta and Google to change their business practices — and pay up.
Meta’s chief executive, Mark Zuckerberg. On Wednesday, a New Mexico judge ordered Meta to pay a record $25 billion penalty for abusing consumer privacy.
In a government office, researchers of drones and electronic warfare gather around a small metal device recovered from a Russian Geran drone. Its purpose — to measure the Earth’s magnetic field for navigation.
"This is the most recent component we found, about a week or two
Ukraine’s military intelligence (HUR) published a 3D model and parts list of Russia’s new Filin cruise missile on 22 October. The breakdown names the Russian companies behind the missile and the foreign makers of its electronics.
HUR runs its War&Sanctions portal to trace such parts back to their makers. Its stated aim is to “deprive the aggressors of the ability to produce weapons for terror,” the portal says. Meanwhile, Russia is betting on cheap, fast cruise missiles, Serhii Beskrestnov, a freelance adviser to the president on technology, told Radio NV in mid-September. Naming the Banderol, Dan-T, Dan-M, and Gerbera-5, he warned they would soon outrun Ukraine’s jet-powered interceptors, so Ukraine needed its own cheap missiles to shoot them down.
Composite body, ground launch
JSC NPO Molniya, part of Russia’s Tactical Missiles Corporation, builds the Filin, HUR said. The agency called it part of a Russian defense-industry trend toward cheap jet-powered, ground-launched air-attack weapons. Russia began firing it at Ukraine in late summer 2026.
HUR’s data puts the carbon and fiberglass fuselage at 3.5 m, with a 3 m wingspan. Some parts are 3D-printed. Russia claims a top speed of 800 km/h. The range is 600–1,200 km, and the missile flies at ultra-low altitude or up to 6 km. Versions carry 50-kg or 100-kg warheads. A solid-fuel booster fires it from a ground launcher.
A firm tied to a Shahed-type drone
PLAZ LLC makes the onboard equipment, HUR said. The firm also helps produce the Garpiya, a version of Russia’s Shahed-type Geran-2 drone. Filin and Garpiya units share a similar layout and markings. Guidance combines a Chinese-made inertial navigation system with a 16-channel Kometa anti-jamming module from Russia’s VNIIR-Progress.
The electronics resemble those in other Russian missiles and drones but carry a larger share of Chinese parts. Of 81 components, 35 are American and 22 Chinese. The engine, however, is Russian: an R500 turbojet from Reynolds LLC. A similar engine earlier turned up in the S-71K Kover aviation cruise missile and S-71M Monokhrom, HUR said.
For comparison, Ukraine found more than 20 foreign components in a different cheap missile, the Banderol, in May 2025. They included 10 US microchips, and the Banderol flies on a Chinese jet engine.
The Cali Fund, set up to raise $1bn a year for biodiversity from drug companies, remains near empty
Big pharmaceutical companies have been accused of “free-riding on nature”, after a landmark biodiversity fund that invites businesses to put some of their profits back into conservation was left virtually empty.
The Cali Fund set out to raise $1bn (£750m) annually, by asking companies that profit from nature’s genetics to contribute towards conservation in low-income countries. But more than 18 months after the fund was launched, it remains far below this target.
France and Germany have teamed up to press the EU to relax its looming combustion car ban. It’s the latest sign the EU's climate agenda is running on empty, says Ben Pile – and the UK isn't far behind.
European Union negotiators have reached a provisional agreement to revise the rules governing the bloc’s carbon market, increasing the number of emissions allowances that can remain in reserve before being permanently cancelled.
The agreement, reached by the Council and European Parliament on 20th October and announced the following day, raises the invalidation threshold of the EU Emissions Trading System’s market stability reserve from 400 million to 700 million allowances.
The compromise reached by EU negotiators follows months of pressure from energy-intensive industries concerned about carbon prices, electricity costs and competition from manufacturers operating under less restrictive environmental regimes.
The measure requires formal approval before entering into force and forms part of a wider review of the EU’s principal carbon-pricing mechanism.
A larger reserve for future market disruptions
Established in 2019, the market stability reserve was designed to address the accumulation of surplus emissions allowances that had weakened the effectiveness of Europe’s carbon market.
Under the Emissions Trading System, companies in covered sectors must surrender allowances corresponding to their greenhouse gas emissions. The total quantity available is progressively reduced, creating a financial incentive to cut emissions.
The reserve adjusts the supply of allowances entering the market, withdrawing them when there is a substantial surplus and releasing them under specified conditions when supply becomes scarce.
Existing rules also provide for the permanent cancellation of allowances held above a threshold of 400 million.
Under the new agreement, that threshold would increase to 700 million, allowing a larger stock to remain available for potential future release.
The change does not automatically introduce 300 million additional allowances into circulation. Releases would continue to depend on the reserve’s operating rules and market conditions.
According to the Council, more than three billion allowances have been invalidated since the mechanism began operating in 2023.
The Commission initially proposed ending automatic invalidation indefinitely, while the Council’s September negotiating position envisaged a temporary suspension followed by a higher threshold.
The compromise retains invalidation but increases the amount protected from cancellation.
Industry competitiveness enters climate negotiations
The agreement follows growing concern about the cumulative cost of European climate regulation, particularly for steelmaking, chemicals, cement and other energy-intensive sectors. Manufacturers have warned that carbon costs, combined with relatively expensive electricity and industrial gas, complicate investment decisions and weaken their ability to compete internationally.
The latest reserve agreement does not directly change the allocation of free allowances, the emissions cap or the obligations imposed on individual industrial installations. Its principal effect would be to preserve a larger buffer that could become available if future market conditions trigger the release mechanism.
For manufacturers planning investments extending into the 2030s, the availability of allowances and the future trajectory of carbon prices influence production costs and the commercial case for decarbonisation technologies.
Carbon market figures reveal changing conditions
The European Commission reported in May that the total number of allowances in circulation during 2025 stood at approximately 1.023 billion.
These withdrawals reflect the existing mechanism for reducing market surpluses. The proposed higher invalidation threshold concerns how many allowances can subsequently remain in reserve rather than being cancelled.
The overall emissions cap will continue to decline under the legislation already governing the ETS.
Consequently, preserving a larger reserve does not remove the long-term constraint on emissions or guarantee lower carbon prices for European industry.
The agreement also concerns the established ETS covering power generation, industry and certain other sectors, rather than the separate ETS2 regime for emissions associated with road transport and buildings.
The Council and Parliament have agreed that the question of gradually reducing the invalidation threshold should be considered during the broader ETS review.
That exercise will address the carbon market’s operation over a longer period, when the declining supply of allowances could create tighter conditions.
The present agreement therefore provides an adjustment to the reserve mechanism without reopening the entire emissions trading framework. Following legal and technical finalisation, the provisional deal must be endorsed by both institutions and formally adopted.
The new 700 million threshold would apply after the legislation takes effect, while the larger review of the ETS continues through the EU legislative process.
The verdict should be seen as a warning for tech companies that New Mexico will hold them accountable, state Attorney General Raúl Torrez said at a news conference.
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