Published by Global Banking & Finance Review®
Posted on December 18, 2025
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleCzech minister warns EU climate goals may lag behind China and US. The Czech government opposes the ETS2 scheme, citing high energy costs.
By Jan Lopatka and Jason Hovet
PRAGUE, Dec 18 (Reuters) - The European Union must rethink its climate aims or risk losing out to China and the United States, new Czech Industry Minister Karel Havlicek said as he called on allies to halt the bloc's next-generation emissions trading scheme.
The Czech Republic's new government took office this week under billionaire Prime Minister Andrej Babis.
In one of its first acts, the government - which the populist ANO leads in coalition with right-wing and far-right parties - rejected the EU's next-generation emissions trading scheme, ETS2, aimed at buildings and road transport and which is meant to provide market incentives for investments.
The government has vowed not to join ETS2, which is due to come into effect in 2028 as part of the EU's Green Deal plans to reduce emissions in the coming decades. The Czechs argue it will raise energy costs and hit industry's competitiveness.
The new government is seeking allies to scrap the ETS2 plans, potentially setting up a clash with the EU's executive. It has said studies show it could cost Czechs annually around 40 billion crowns ($1.92 billion) - more than any potential EU penalties from not implementing the legislation.
MINISTER SAYS NEED TO KEEP PACE WITH POWERS
"We are not prepared to participate in it, at least for the reason that it is brutally disadvantageous for the Czech Republic," Havlicek, ANO's main vice-chairman and first deputy prime minister in the government, told Reuters at his offices on Wednesday.
"Different countries are taking different positions on this, and we want to be the country that leads in the sense of changing the system from the ground up," he said.
Household electricity prices in the Czech Republic were some of the highest in the 27-member EU in the first half of the year, according to Eurostat data. Companies have also long complained about high energy costs. The country also has a large auto manufacturing sector.
"For us, it is important that we start to keep pace with other great powers, whether it is China or the United States, and that we are not disadvantaged here," he said.
Havlicek said Europe was like a car hurtling toward a wall but "reassuring itself the car is electric", and that climate targets and schemes were having a negative impact and leaving the EU behind competitors where businesses face fewer constraints.
"I do not want to be a doormat for China and I do not want our companies leaving for the United States just because they have cheaper inputs there, and that thanks to climate measures, even companies investing in climate projects will leave for America."
($1 = 20.8150 Czech crowns)
(Reporting by Jan Lopatka and Jason Hovet; Editing by Alison Williams)
Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing emissions. Companies can buy or sell allowances that permit them to emit a certain amount of pollutants.
The EU Green Deal is a set of policy initiatives by the European Union aimed at making Europe climate-neutral by 2050. It includes measures to reduce greenhouse gas emissions and promote sustainable practices.
Energy costs refer to the expenses incurred by businesses and households for electricity, gas, and other forms of energy. These costs can significantly impact economic competitiveness and household budgets.
Sustainability in finance refers to investment strategies that consider environmental, social, and governance (ESG) factors. It aims to create long-term value while minimizing negative impacts on society and the environment.
Industry competitiveness refers to the ability of a company or sector to compete successfully in the market. It is influenced by factors such as cost structure, innovation, and regulatory environment.
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