EU environment ministers remain divided over the ETS reform, with Italy calling for greater protection for industry while the Commission defends the existing ETS2 timetable.
Add Rinnovabili to your Google favorites EU ETS reform: member states seek agreement by December
The EU ETS reform remains a contentious issue in Europe’s efforts to reconcile industrial competitiveness with decarbonisation. At the latest EU Environment Council meeting, held under the Irish Presidency, European officials and environment ministers reviewed negotiations on changes to ETS1 and the future of ETS2, with the aim of reaching an agreement by December. Despite the optimism expressed at the subsequent press conference, significant differences between member states remain unresolved.
EU environment ministers seek common ground on ETS1
The meeting marked the first formal discussion among EU environment ministers on proposed changes to ETS1. Ireland’s Minister for Climate, Energy and the Environment, Darragh O’Brien, emphasised the shared recognition among member states of the system’s importance.
“We all agree that a well-functioning ETS is vital for European competitiveness and prosperity,” O’Brien said, recalling that the scheme has played a fundamental role in modernising EU industry over its 20 years of operation.
For the Irish minister, the immediate priority is to provide businesses with greater stability and certainty.
“We all agree that industry needs certainty. Our ambition is to bring the dossier back to the Council in December to reach a general approach and an agreement,” he added, acknowledging that the coming months would involve intensive negotiations aimed at finding a balanced compromise.
Italy leads opposition to the EU ETS reform
However, divisions among the 27 member states persist, and renewed pressure on energy markets stemming from the conflict in the Middle East threatens to deepen them further.
Italy is leading the opposition to the current direction of the reform.
“In recent years, we have observed with great concern that European industry’s share of GDP has declined, with energy-intensive sectors being the hardest hit,” said Vannia Gava, Italy’s Deputy Minister for the Environment and Energy Security, speaking in Luxembourg.
“Businesses have faced a double burden: high gas and electricity prices, exacerbated by geopolitical crises, and rising ETS allowance prices. In response to these concerns, in July, together with nine other member states, we called for decarbonisation that also safeguards European competitiveness.”
Italy’s position reflects broader concerns over the economic impact of carbon pricing on European manufacturers, particularly energy-intensive industries already struggling with high energy costs.
Investment conditionality gains support among EU member states
A central element of the discussions concerned the overall structure of the reform and the introduction of conditionality criteria linked to investment within the European Union.
European Commissioner for Climate, Net Zero and Clean Growth, Wopke Hoekstra, highlighted the broad support expressed for the proposal’s underlying framework.
“There was very significant support for the overall architecture, for the rationale behind introducing reciprocity into the system, and for ensuring that the ETS truly becomes an engine for investment,” Hoekstra said.
He explained that the primary objective remains to ensure that climate competitiveness and EU energy independence advance together.
The Commissioner also noted that investment conditionality had received widespread backing from member states, although differences remain over how it should be implemented.
“It is absolutely clear that all countries want predictability, and almost all have argued for more investment on European soil. This leads almost automatically to the conclusion that we need an engine capable of delivering it.”
ETS2 implementation: the European Commission rules out further changes
The meeting also addressed the future of ETS2, the emissions trading system designed to cover buildings and road transport, whose introduction was postponed by one year as part of the broader political agreement on the EU’s 2030 targets.
Responding to journalists’ questions about concerns raised by several member states, particularly Italy, which is now calling for the system’s introduction to be reconsidered with a view to a possible suspension, Commissioner Hoekstra reaffirmed the European Commission’s position.
He ruled out any changes to the framework already approved.
“The Commission has no plans to change anything in its approach to ETS2, either in its design or in its implementation pathway,” Hoekstra stated.
He recalled that the one-year postponement had formed part of the broader political compromise.
The Commissioner also stressed that, despite objections from a group of countries, a qualified majority representing more than two-thirds of member states continues to support implementing ETS2 according to the agreed timetable and framework.
Irish Presidency aims for a compromise by December
For its part, the Irish Presidency confirmed its intention to keep negotiations open and take account of the concerns raised by all member states ahead of the decisive Council meeting in December.
“Our task as Presidency is to facilitate the debate and work towards a workable compromise, which I believe we will be able to achieve,” O’Brien concluded.
The coming months will therefore be crucial in determining whether the EU can reconcile demands for industrial competitiveness with its existing climate commitments, while preserving the role of the EU Emissions Trading System in Europe’s decarbonisation strategy.
