Meloni and Nine EU Leaders Call for Urgent Revision of Emissions Trading System

Italian Prime Minister Giorgia Meloni and the leaders of nine other European Union member states sent a joint letter to the European Commission calling for a "thorough revision" of the bloc's carbon market, asking that free emission quotas be extended beyond the current 2034 deadline. The letter, promoted by Poland and co-signed by Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Latvia, Portugal, Romania, and Slovakia, argues that the existing framework must be adapted to the new economic and geopolitical context. The signatories warn that without reform, the system risks accelerating the delocalization of industrial production outside the Union. The initiative marks one of the most coordinated pushes by EU member states against the current architecture of the bloc's flagship climate instrument.

The EU Emissions Trading System has been in operation since 2005 and functions as the EU's primary tool for cutting industrial carbon emissions. Under the current rules, free emission quotas allocated to energy-intensive industries are scheduled to be phased out by 2034, after which companies would be required to purchase all allowances on the open market. The system has faced recurring criticism from industrial groups and some member states who argue that it raises production costs and puts European manufacturers at a disadvantage relative to competitors in countries with less stringent carbon pricing.

Ten governments warn of industrial delocalization risk In their letter, the ten leaders stress that the current ETS framework, while effective in reducing emissions, must be adapted to the new economic and geopolitical context. They call for a more balanced approach that accounts for the needs of energy-intensive sectors and the specificities of individual member states. The extension of free quotas beyond 2034 is described by the signatories as essential to accompany the industrial transition without compromising employment and growth. The letter also highlights the need to ensure that climate policies do not generate disproportionate costs for businesses and citizens, particularly given high energy prices and ongoing international tensions. The signatories ask the Commission to open a political and technical discussion on the future of the ETS ahead of the next legislative cycle, with the stated goal of reconciling climate ambition and industrial sustainability. The initiative was promoted by Poland, underscoring Warsaw's longstanding concern over the pace and cost of the EU's industrial decarbonization agenda.

Confindustria chief calls for full ETS suspension Emanuele Orsini, president of Confindustria since May 2024, went further than the joint letter in an interview with the German newspaper Frankfurter Allgemeine Zeitung, calling on Europe to suspend the ETS entirely. Orsini described the current situation as an "emergency situation" that warrants a more drastic response than a phased revision. His remarks reflect a broader mood among European industrial associations, which have grown increasingly vocal about the competitive pressures facing manufacturers on the continent. The call for suspension goes beyond what the ten governments formally requested in their letter to the Commission, but points in the same political direction.

EU institutional leaders urge unity on energy and geopolitics European Council President António Costa, speaking on the energy situation, described the current moment as a "difficult moment" and called on Europe to increase its own production. European Parliament President Roberta Metsola, a Maltese politician serving in that role since January 2022, separately emphasized to Costa the need for EU unity on Ukraine, Iran, and competitiveness. Lithuania, meanwhile, expressed concern that the ongoing conflict in the Middle East could divert international attention away from the war in Ukraine, a worry shared by several smaller EU member states on the bloc's eastern flank. The convergence of energy market pressures, geopolitical uncertainty, and industrial competitiveness concerns has placed the future of the ETS at the center of a broader debate about the EU's economic and strategic direction. The Commission has not yet formally responded to the joint letter from the ten member state leaders.