Italy and other EU countries call for ETS review

The upcoming review of the system should ensure market predictability and stability

Ministers from 11 EU member states have called for a major overhaul of the ETS system to stabilize prices, protect energy-intensive industries, and encourage investment in clean technologies, according to Il Sole 24 Ore.

The upcoming ETS review should ensure effective price signals, predictability, market stability, and protection against excessive price volatility, as well as a pragmatic approach to free allocation of allowances. These requirements were put forward in a joint statement by the ministers of industry of Italy, Austria, Croatia, the Czech Republic, France, Germany, Luxembourg, Poland, Portugal, Slovakia, and Spain.

As Italian Minister of Enterprise and Production Adolfo Urso noted at a meeting in Brussels on February 25, the EU ETS is an additional tax on European companies that affects their costs and limits their competitiveness.

«We will ask the European Commission to suspend its implementation until a thorough review of emission benchmarks and quota allocation mechanisms has been carried out, including postponing the phasing out of free quotas,» he said.

The next review of the ETS is expected in July. The signatories of the statement believe that it should be aimed at supporting the competitiveness of European industry and strengthening investment in innovative technologies.

The ministers warned that reducing the overall EU-wide emissions cap could lead to industrial operators facing high prices, increased market volatility, and limited liquidity.

According to Urso, the review should introduce a stable mechanism for supporting exporting companies, which has not yet been fully defined in the CBAM reform. He also stressed the need for coordination between the review of the cross-border carbon adjustment mechanism and the ETS reform.

Recall that Czech Prime Minister Andrej Babiš, in a letter to EU institutions and leaders of the other 26 countries of the bloc published on February 2, called on the EU to review its carbon trading schemes in order to lower energy prices.