The European Union has put forward proposals that would slow cuts to companies’ greenhouse gas emissions limits, as part of a major overhaul of climate policy.

The reforms would relax the rules of the bloc’s emissions trading system (ETS) to give companies more time than previously planned to reduce their carbon output.

The changes would mean some industries could get emissions allowances until 2038 rather than 2034, if they commit to investing in decarbonisation efforts.

The proposals still need to be approved by EU countries and lawmakers, a process that could take a year.

“We are taking a more business-friendly and, if I may say so, smarter approach,” said EU Climate Commissioner Wopke Hoekstra.

The European Commission, which develops legislation for the EU’s 27 member states, said the changes would ensure the ETS was aligned with the EU’s goal of reducing carbon emissions by 90% by 2040, compared to 1990 levels.

The ETS, which was introduced in 2005, is the EU’s main tool to curb greenhouse gases.

But it has been criticized by several member states, with Italy in particular condemning the trading scheme as a de facto tax that has helped keep energy prices artificially high.

Under the ETS, Europe’s industries and power plants must buy a permit or allowance for every ton of carbon dioxide they emit, creating a financial incentive to invest in cleaner technologies.

Companies can purchase additional permits or exchange them. Some companies receive permits for free to help them compete with foreign companies that do not pay carbon costs.

The ETS also limits the number of permits issued each year to ensure that missions decrease.

The European Commission has proposed reducing the rate at which this limit is reduced each year to around 3.7% from 2031 and then to 1.7% from 2036, down from 4.3% currently.

As part of the changes, the EU also proposes continuing free permits until 2038, rather than ending them in 2034, when they were to be replaced by a carbon border charge on imports for some sectors.

The Commission would also offer 80% free advance permits to companies planning to invest in decarbonisation in Europe. The companies would obtain the remaining 20% ​​once those investments were made.

Responding to the proposals, Polish Climate Minister Paulina Hennig-Kloska said Poland would push to further weaken the policy.

“For the first time we are seeing a softening of the stance instead of a hardening. This is a great success for Poland. Although we will fight for more,” he said.

But Green politicians were less impressed. A German member of the European Parliament, Michael Bloss, said the plans would result in “gigantic climate pollution” and the next generation would have a worse quality of life as a result.