Published by Global Banking & Finance Review®
Posted on February 12, 2026
3 min readLast updated: February 12, 2026
Add as preferred source on GoogleEuropean utilities fall as EU considers emissions trading changes, impacting carbon prices and sector earnings.
By Danilo Masoni and Samuel Indyk
MILAN, Feb 12 - European utilities and cement makers tumbled on Thursday, tracking a sharp slide in carbon prices after suggestions the European Union should intervene to reform the market, which investors fear could squeeze these sectors' earnings.
Europe’s benchmark carbon contract fell to its lowest level since August after leaders from countries including Germany and Italy said the European Union should consider revising the bloc’s emissions trading system (ETS).
"If that message is gaining traction, those who have been speculating on and buying green certificates are realising there could be some dilution ahead," said Luca Moro, CIO at SpesX, an Italian fund focused on the energy transition.
"If CO2 credits fall, power prices drop. And when power prices drop, generators earn less."
The European utility index was the worst-performing sectoral gauge, falling as much as 2.3%, trimming some of this year’s strong gains. The broader STOXX 600 rose 0.2% by 1501 GMT.
Among the biggest losers were Germany’s RWE, Italy’s A2A and Enel, Finland’s Fortum, Austria’s Verbund and Denmark’s Orsted, all down between around 3% and 7%.
European utilities and renewable energy stocks have been buoyed in recent months by expectations they would benefit from rising power demand linked to artificial intelligence infrastructure. But potential changes to emissions rules complicate the outlook.
"You now have two opposing forces: deregulation tends to push power prices down, while data‑centre build‑out tends to push them up. The question is which one wins out first," said Moro.
The benchmark EU carbon permit contract was last down 6.5% at 73.35 euros per metric ton of CO2, LSEG data showed.
The ETS is the EU’s most important climate‑policy tool. It requires power plants and industrial sites to buy CO2 permits for their emissions and caps the total number of allowances in circulation, tightening over time to drive reductions.
European utilities have risen over 40% over the last year, beating the broader index.
Cement makers also came under pressure on Thursday after the calls for a revision to the EU's ETS. Shares in Heidelberg Cement, Holcim and Buzzi were down between 6.1% and 8.2%.
Berenberg analysts believe that carbon regulation has been a positive for the sector as it not only forced companies to improve their utilisation and close less efficient plants, but also improved pricing to ensure investment costs were recovered.
"Given these positive regulatory-driven financial outcomes, it would therefore be rational to view any dilution or delay to carbon regulation as a net negative for the larger European companies," Berenberg said in a note.
"Any changes to timing and/or implementation of such regulation would have a commensurate impact on the shape of cement pricing and utilisation," Berenberg said, while reiterating that it holds its core view that the cement sector was going through a period of positive structural change.
(Reporting by Danilo Masoni; editing by Dhara Ranasinghe and Tomasz Janowski)
The EU Emissions Trading System (ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing emissions of pollutants.
Carbon credits are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They can be traded in carbon markets.
Sustainability in finance refers to the integration of environmental, social, and governance (ESG) factors into financial decision-making to promote long-term value.
Deregulation can lead to lower power prices by increasing competition among energy providers, but it may also introduce volatility in the market.
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