Finance
Eight countries warn EU not to weaken carbon market, document shows
Published by Global Banking & Finance Review®
Posted on March 12, 2026
2 min readLast updated: March 12, 2026
Quick Summary
Eight EU members—including Spain, the Netherlands and six others—warn the European Commission against dismantling or suspending the Emissions Trading System (ETS), cautioning such action would penalise early decarbonisation efforts amid energy price surges triggered by Middle East tensions.
Eight EU Nations Warn Against Weakening Core Carbon Market Policy Amid Crisis
EU Emissions Trading System Faces Pressure Amid Energy Crisis
By Kate Abnett
Calls to Suspend the Emissions Trading System
BRUSSELS, March 12 (Reuters) - Spain, the Netherlands and six other governments have urged the European Union not to dismantle or suspend the bloc's emissions trading system, its main climate change policy, as Brussels hunts for ways to curb energy prices.
With energy prices surging on disruption to Middle Eastern oil and gas supplies, Brussels is facing calls from governments including Italy to suspend its ETS, which requires power plants to buy permits to cover their CO2 emissions.
Joint Statement from Eight EU Countries
"Making fundamental changes to the ETS, calling into question the ETS instrument itself, or suspending it, would constitute a very worrying step backwards," a group of eight EU countries said in a joint paper, seen by Reuters.
Weakening the scheme would "dramatically penalise early movers who have already invested and innovated in decarbonisation", said the paper, which was also signed by Denmark, Finland, Luxembourg, Portugal, Slovenia and Sweden.
Purpose and Impact of the ETS
Financial Incentives for Decarbonisation
By putting a price on pollution, the ETS aims to provide a financial incentive to companies to invest in lower-carbon production.
Opposition to Weakening the ETS
The Commission has so far held off calls from other governments, including Slovakia and the Czech Republic, to weaken the ETS.
Energy Price Crisis and Policy Responses
But officials are hunting for quick fixes to avoid the Iran conflict triggering a repeat of 2022, when Europe faced record-high energy prices after Russia invaded Ukraine and slashed gas deliveries to Europe.
The European Commission has said it will provide options for EU leaders to consider at a summit on 19 March. European Commission President Ursula von der Leyen said on Wednesday Brussels was exploring a gas price cap, but did not mention changes to the ETS.
ETS Costs and Regional Impact
Contribution to Electricity Bills
The ETS cost comprises around 11%, on average, of electricity bills in Europe, according to EU data. It results in higher costs for countries like Poland, where the ETS's contribution to power bills is 24% due to the dominant role of coal power plants in the power mix.
(Reporting by Kate Abnett; Editing by Kirsten Donovan)
Key Takeaways
- •The joint paper from Spain, the Netherlands, Denmark, Finland, Luxembourg, Portugal, Slovenia and Sweden argues that changing or suspending the ETS would undercut investors in clean energy and harm long‑term climate objectives.
- •EU officials are exploring measures like a gas price cap ahead of the March 19 summit, but have resisted pressure—including from Slovakia and Czechia—to weaken the ETS despite urgent energy cost concerns.
- •ETS allowance revenues dropped from €33 billion in 2023 to €24 billion in 2024 as carbon prices eased—but still provide significant funding for climate and energy projects across the EU.
- •Renewables are gaining ground in Europe’s power mix—with renewables supplying 47.5% of electricity in 2024—a growing share that strengthens the rationale for maintaining incentives like the ETS.
References
Frequently Asked Questions about Eight countries warn EU not to weaken carbon market, document shows
1Which countries warned the EU against weakening the carbon market?
Spain, the Netherlands, Denmark, Finland, Luxembourg, Portugal, Slovenia, and Sweden urged the EU not to suspend or weaken the Emissions Trading System.
2What is the EU Emissions Trading System (ETS)?
The ETS is the European Union's main climate change policy that requires power plants to buy permits to cover their CO2 emissions, putting a price on pollution.
3Why are some EU nations calling for changes to the ETS?
Rising energy prices due to disruptions in oil and gas supplies have prompted calls from some governments to suspend or weaken the ETS.
4How does the ETS impact electricity bills in Europe?
On average, ETS costs make up about 11% of electricity bills in Europe, with higher impacts in countries heavily reliant on coal, like Poland.
5What is the European Commission's response to the energy price crisis?
The Commission is exploring measures such as a gas price cap but has so far resisted altering the ETS policy.
