A number of EU member states, including Spain, Sweden and Denmark have made clear their belief that weakening the ETS would penalise companies that have sought to modernise and become greener and reward the laggards – those industries clinging to long-term reliance on fossil fuels.
On the other side of the argument, Central European countries are fundamentally opposed to the ETS, while Austria and Italy want to tackle the impact of the ETS on electricity prices.
Italian Prime Minister, Giorgia Meloni, said last week: “With the outbreak of the crisis in the Middle East, the issue of energy prices has clearly become even more important, which is why, at European level, we are also calling for the urgent suspension of the application of the ETS to electricity production.”
One proposal by the European Commission, which admits the ETS system needs a revamp, would be to use revenues earned from the ETS to help industries in EU member states struggling with rising costs.
“We are in a complex world of trade-offs,” says Georg Zachmann, a specialist in EU energy and climate policies from the Brussels-based Bruegel think tank.
“If Europe wants to get invested in nuclear or renewable energies with the aim of being more self-reliant and energy secure, that will take time.”
He describes it as “madness” that sunshine drenched southern Italy doesn’t put up more solar panels, for example.
“You need a long-term plan but also a realistic one. The EU has one, but new targets for 2030 and particularly 2040 are very ambitious.”
The EU has set a legally binding target to reduce net greenhouse gas emissions by 90% by 2040, compared to 1990 levels. “Are they actually credible?” he asks.