The EU faces intense pressure to address soaring industrial energy costs, exploring short-term solutions like reviewing energy taxes and carbon costs to boost competitiveness.
Reducing the pressure of industrial energy costs
The European Union is considering short-term interventions to reduce the pressure of industrial energy costs. According to a document seen by Reuters, the EU is evaluating the possibility of reviewing energy taxes, grid charges, and carbon costs to alleviate businesses from high energy prices. Brussels must confront repeated alarms from the European industrial sector, even predating the attack by the United States and Israel on Iran. Companies complain about their inability to compete with rivals in China and the United States, who benefit from significantly lower energy costs.
Short-term interventions to support the most affected sectors
The EU is considering solutions for rapid implementation. The President of the European Commission, Ursula von der Leyen, has committed to presenting several options that EU leaders will consider during the summit on March 19. Based on the document prepared for next Friday’s meeting of EU commissioners, the Commission is reportedly considering various short-term interventions to support the most affected sectors.
Any legislative changes would not yield tangible immediate results. For this reason, the Commission is reportedly considering bridging solutions to reduce energy prices over the next 2-5 years, until the ecological transition allows for an easing of pressure on electricity prices. The Commission will analyze grid charges and carbon costs.
However, even before last week’s events and the increase in gas prices, companies complained about excessively high energy prices in Europe, higher than those borne by major industrial competitors in the United States and China. The proposed solutions include the possibility of reforming the electricity market and the abandonment or weakening of the EU Emissions Trading System (ETS), a solution put forward by Italy and Germany.
The debate in the EU
In February, European Union businesses urged the Commission to maintain free emission allowances for industries for longer, ahead of the system’s review scheduled for 2026. Furthermore, the President of the European Commission, Ursula von der Leyen, announced that the structure of the electricity market would be discussed at the upcoming European Council on March 19, sparking a strong reaction from European lobbies. However, seven EU member states warned that tampering with the mechanism that determines energy prices in Europe would harm the system’s effectiveness and lead to increased bills.
Teresa Ribera, the EU’s top official for decarbonization, stated that Europe’s response to rising industrial energy costs is to focus as much as possible on electrification and reducing fossil fuel consumption. The same type of exhortation also came from UN climate chief, Simon Stiell.
Why the ETS should not be dismantled
Michael Bloomberg, founder of Bloomberg and former mayor of New York, ahead of the European Council on March 19, issued a heartfelt appeal to European leaders not to dismantle the carbon market. Bloomberg used a striking analogy: the carbon market is like a thermometer. It tells us how much our economy is out of balance with the planet’s limits. “Breaking the thermometer, however, will not bring down the fever“, Bloomberg wrote. Eliminating or weakening the ETS would only hide the symptoms of the problem without addressing its causes: dependence on imported fossil fuels, whose prices are too volatile.
Bloomberg explained that the system today sends a fundamental and unequivocal signal to companies and investors: polluting will progressively become more expensive. This mechanism drives utilities and heavy industries to plan long-term investments in clean technologies. Weakening the system now would mean destroying investor confidence just as the transition is beginning to bear fruit.
