Energy and Industry Groups Urge EU to Keep Carbon Market Predictable
A coalition of energy, industry and investor organisations has urged EU leaders to protect the Emissions Trading System (ETS), warning that ad-hoc interventions should not weaken its long-term signal for investment.
The open letter, addressed to European Council President António Costa and dated 14 October, ahead of this week's European Council meeting, is signed by more than 20 organisations, including Eurelectric, WindEurope, Nucleareurope, SolarPower Europe and the UK's Energy UK, and was developed with the Institutional Investors Group on Climate Change. The signatories say their sectors are set to invest trillions by 2050 in clean energy, efficiency and infrastructure, and that this requires a carbon price that is meaningful and predictable. They point out that emissions in ETS sectors have fallen by around 50% since 2005 while the EU economy has grown by around 30%, and call for the reserve that manages surplus allowances to keep operating on clear rules. They also want at least half of ETS revenues reinvested in decarbonising the sectors covered, free allowances to be targeted and tied to credible investment plans, and international credits not to replace emissions cuts made in Europe.
The letter comes as the ETS faces its biggest debate in years. The system works by capping emissions and letting companies trade allowances, with the cap tightening over time so the price of carbon rises as supply falls. High energy costs have since led some governments to call for relief, and the Commission has proposed changes that would soften some of the system's tightening mechanisms and extend support for energy-intensive industry. The aim is to protect competitiveness and give industry more time to adapt. The groups behind this letter back the ETS but want the balance kept right, arguing that frequent changes to the rules make investment harder to plan, because clean energy projects are financed on the expectation that carbon prices will follow a clear path.
Carbon prices have already reflected that tension, falling to a seven-week low earlier this month partly on policy uncertainty. Leaders have committed to completing the wider review by early 2027, though how far they will go in reshaping the system is still unclear.