Meloni and Tusk Lead 10-Nation Push to Overhaul EU Carbon Market

Italian Prime Minister Giorgia Meloni and nine other European Union leaders have sent a letter to EU leadership calling for a review of the bloc's carbon market and the extension of free emissions allowances for industry beyond 2034, ahead of an EU summit. The letter, reported by ANSA on March 18, 2026, asks for concrete changes to be delivered by May 2026. Polish Prime Minister Donald Tusk is among the signatories, pressing the EU to maintain free carbon permits for industry, according to Reuters. The push reflects growing pressure from a coalition of member states to ease the financial burden the EU Emissions Trading System places on European manufacturers at a time of heightened economic competition.

Industry voices call for full suspension of carbon market Emanuele Orsini, president of Confindustria, went further than the letter's signatories in an interview with the German newspaper Frankfurter Allgemeine Zeitung, arguing that Europe should suspend the ETS entirely. Orsini described the current situation as an "emergency phase" requiring exceptional measures. Italian Environment Minister Gilberto Pichetto Fratin took a more measured position, stating that "a correction is needed on the ETS, even without suspension." Pichetto Fratin's stance suggests a division within the Italian government itself over how aggressively to pursue reform of the carbon market. Italian Deputy Premier and Transport Minister Matteo Salvini also weighed in, calling the ETS "senseless" and proposing it be addressed in Brussels as part of a broader effort to bring down fuel prices. Salvini said proposals on reducing fuel costs would be assessed at a cabinet meeting, with a stated goal of pushing diesel below 1.90 euros per litre, according to ANSA.

Environmental groups warn weakening ETS undermines energy crisis response Environmental non-governmental organizations pushed back against the campaign to roll back the carbon market, arguing that weakening the ETS would undermine the European Union's ability to respond to the energy crisis, according to ANSA. The NGOs framed the carbon market not as a burden on industry but as a structural tool for reducing energy dependency and driving investment in cleaner alternatives. Their intervention highlights the tension between short-term industrial competitiveness concerns and longer-term climate and energy security goals. ANSA also reported that Italy, despite sharpening its position against the ETS, remains in a minority within the EU on the question of outright suspension or fundamental restructuring. The broader coalition of ten leaders signing the letter represents a significant but not yet dominant bloc within the 27-member union.

Summit timing adds urgency to carbon market debate The letter was timed deliberately ahead of an EU leaders' summit, with the signatories requesting that changes be delivered by May 2026, giving the European Commission a tight window to respond. The EU summit is expected to address the carbon market among other pressing economic and energy topics, according to Reuters. Donald Tusk's involvement is notable given Poland's historically coal-heavy industrial base and its longstanding resistance to rapid decarbonization timelines. The demand for free quotas beyond 2034 targets a scheduled phase-out of free allowances under the current ETS framework, which industry groups argue would expose European manufacturers to competitive disadvantage against rivals outside the bloc. The debate over the ETS has intensified as European governments face simultaneous pressure from high energy costs, global trade competition, and commitments under the Paris Agreement.

The EU ETS has operated as a cap-and-trade system since 2005, making it one of the world's oldest and largest carbon markets. Free allowances were introduced at the system's launch to cushion energy-intensive industries from abrupt cost increases, with a gradual phase-down planned over subsequent decades. The question of extending or ending free quotas has been a recurring fault line between member states with heavy industrial sectors and those pushing for faster decarbonization.