Ahead of the European Council on 19–20 March, we’ve joined a coalition of 35 civil society organisations urging EU leaders to safeguard the EU Emissions Trading System.
About the letter
Ahead of the 19-20 March European Council, a group of 35 civil society organisations is calling on EU leaders to protect the integrity and predictability of the EU Emissions Trading System (EU ETS).
At a time of geopolitical instability and economic realignment, policy certainty is essential. European industry requires stable and predictable carbon pricing to move ahead with capital-intensive low-carbon investments. This call for stability is not limited to civil society. Recent industry communications – including a WindEurope-coordinated joint statement and a letter from Nordic business federations – underline that weakening the EU ETS would increase regulatory risk and financing costs, delay final investment decisions and weaken Europe’s attractiveness for long-term industrial projects. The EU ETS has already been carefully calibrated to account for competitiveness concerns, including through extensive free allocation and built-in stability mechanisms that have shielded economic actors from the full societal cost of CO2 emissions.
The EU ETS is not responsible for the EU’s loss of industrial competitiveness. Up until now, it has given free permits to industry, so its effective cost to industry has sometimes even been negative. In addition, industrial electricity users are generously compensated for the indirect carbon costs they pay through power bills.
Our demands:
- Uphold Europe’s position as a global leader on climate policy and provide clear political backing for a strong, predictable and rules-based carbon pricing framework insulated from short-term political intervention;
- Allow the European Commission to present its forthcoming EU ETS review, to be addressed through the ordinary legislative process, with Member States fully exercising their role within the Council;
- Maintain the agreed cap trajectory in line with the legally mandated 2030 and 2040 climate targets and safeguard the integrity of the Market Stability Reserve;
- Incentivise low-carbon production by phasing out free allocation to polluting products, including through extending the CBAM;
- Strategically deploy ETS auction revenues and the Innovation Fund to support the scaling up of products and processes that do not benefit from free allocation or CBAM protection, electrification, circularity, renewable energy and innovation while avoiding fossil-based lock-in.
Related publications
More on the EU ETS
In or Out: What’s best for carbon removals and the EU ETS?
What will the future of the EU Emissions Trading System (ETS) look like as the emissions cap heads towards zero? Is integrating carbon dioxide removals (CDRs) into the ETS a solution to help the EU achieve its climate goals? Or would they compromise the integrity and functioning of the system? These questions are at the forefront of the Commission’s mind as they review different options for the future of the ETS ahead of the 2026 revision.
A closer look at 2023 emissions: steelmaking caused a quarter of industry pollution
This brief analyses 2023 emissions under the EU Emissions Trading System (EU ETS), using the latest data available from the EU Transaction Log (EUTL) . It particularly focuses on the iron and steel sector.
Feedback on the inclusion of permanent CCU in the EU ETS
Sandbag urges strict safeguards on permanent CCU within the EU ETS, calling for clear permanence standards, transparent product reviews, and faster removal of free allowances, while stressing CCU must complement (not replace) direct emission reductions.
