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EU Plans Price Controls for New Carbon Market
Published by Global Banking & Finance Review®
Posted on October 22, 2025
2 min readLast updated: January 21, 2026
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Published by Global Banking & Finance Review®
Posted on October 22, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe EU plans to control prices in its new carbon market to address concerns about rising fuel costs and promote cleaner technologies.
By Kate Abnett
BRUSSELS (Reuters) -The European Union is drafting measures to control prices in its new carbon market, in response to governments' concerns that the emissions-cutting scheme could increase fuel bills, the bloc's climate chief said in a letter seen by Reuters.
The policy is designed to impose a price from 2027 on planet-heating emissions produced by heating and transport fuels, to encourage the shift to electric vehicles and cleaner home heating systems. Revenue from the scheme would be spent on helping people pay bills, subsidise electric cars and energy-saving home renovations.
However, some governments fear the measure will stoke opposition to climate change policies from citizens, if it is perceived as raising their bills. A group of 19 countries including the Czech Republic, France and Germany asked Brussels this year to introduce stricter price controls to address this.
"I understand the concerns regarding uncertainties on future price levels and price volatility in ETS2 (the upcoming carbon market) and share those to a large extent," EU climate commissioner Wopke Hoekstra said, in a letter responding to the demands.
The new EU carbon market is designed so that if the CO2 price hits 45 euros, extra CO2 permits will be released into the market to tame prices.
PROPOSAL TO DOUBLE NUMBER OF PERMITS RELEASED
Hoekstra said the Commission will propose doubling the number of permits released in this scenario to potentially reach up to 80 million per year in 2027, 2028 and 2029.
"This will more decisively address unwarranted price rises and improve market confidence, which is key to plan decarbonisation investments," said the letter, dated October 21.
The Commission will also propose launching carbon permit auctions early, in 2026, to provide governments with funds to kick-start investments to help people shift to cleaner technologies.
Czech Prime Minister Petr Fiala on Wednesday welcomed the plans, but said he wanted Brussels to go further and delay the carbon market's launch.
EU countries' leaders will discuss the bloc's new climate target for 2040 at a summit on Thursday, with a focus on what funding or policies are needed to ensure businesses and citizens can meet the goal.
(Reporting by Kate Abnett; additional reporting by Jan Lopatka, Jason Hovet, editing by Ed Osmond)
A carbon market is a trading system where companies can buy and sell permits to emit carbon dioxide, aiming to reduce greenhouse gas emissions and encourage investment in cleaner technologies.
Carbon permits are allowances that enable companies to emit a certain amount of carbon dioxide. Companies can trade these permits in a carbon market to manage their emissions more effectively.
Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing emissions. Companies can trade allowances for emissions, promoting cost-effective reductions.
The EU climate target refers to the European Union's goals for reducing greenhouse gas emissions, which include commitments to achieve significant reductions by specific future dates, such as 2040.
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