European lawmakers voted in favour of a deal to reform the region’s carbon market after 2020.
It would also allow the Market Stability Reserve capacity to be doubled to mop up excess emission allowances on the market.
The EU ETS sets a cap on the total amount of greenhouse gases that can be emitted by the sectors covered by the system.
Within the cap, companies receive or buy emission allowances which they can trade with one another as needed.
The reform aims to help the EU to deliver on its target of cutting greenhouse gas emissions by at least 40% before 2030.
Out of 678 voting members of the Parliament, 535 were in favour, with 104 against and 39 abstentions.