EU reforms carbon market under pressure from industry

The ETS forces heavy polluters to pay for the greenhouse gases they emit, obliging them to buy allowances that are capped in number, sold in auctions and tradable.

The scheme was already scheduled for review, but the July overhaul pitched countries such as Italy, Poland and Czech Republic wanting it watered down against the system’s defenders including Spain and the Scandinavian nations.

In the face of the spike in energy prices caused by the US-Iran war and the record heatwaves in Europe, advocates have been pushing for the EU to stick to its ambitious climate goals.

But, caught between the United States and China, momentum has shifted to a more pro-business stance since the start of European Commission chief Ursula von der Leyen’s second mandate in 2024 – prompting a rollback of environmental rules that marked her first term.

In a bid to show its climate ambitions remain intact, the EU separately laid out an ambitious target to boost the use of clean electricity from renewable sources as opposed to fossil fuels by 2040. 

Brussels wants to hit 46 per cent of final energy consumption in the bloc, double the level being achieved today.