Babiš and Saxony-Anhalt premier agree emissions trading system is unsustainable

The ETS 1 emissions trading system is unsustainable and is harming the automotive industry, Prime Minister Andrej Babiš (ANO) and Sven Schulze, premier of the German state of Saxony-Anhalt, agreed during talks in Prague today. Babiš wrote this on X. He said they also discussed energy cooperation.

"We discussed energy cooperation, especially my energy highway project between the Czech Republic and Germany, but also the automotive industry and the problems the current ETS 1 system is causing this sector. I am pleased that the state premier and I agree that the current situation is unsustainable," Babiš wrote.

At the European Council meeting to be held in Brussels on 19 and 20 March, Czechia wants to support an Italian proposal to suspend the application of the emissions trading system. According to Babiš's statement on Monday, the Czech Republic also wants to propose a price cap and exempt energy-intensive industries from the system.

The European Commission has previously said it plans to propose a reform of the system in the third quarter of this year, without specifying a date.

Babiš recently described the current system as an absolute catastrophe, saying that Czechia has so far lost nearly CZK 160 billion because of it. Italy, Germany, Austria, Slovakia, Poland and Hungary support the Czech position calling for changes to the ETS 1 emissions trading system.

The price of allowances in the EU ETS 1 system currently stands at around EUR 70 per tonne of carbon dioxide emissions. In recent weeks, the price has ranged from roughly EUR 69 to EUR 75 per tonne. In 2021 and 2022, it ranged from EUR 80 to EUR 100 per tonne; in 2024 and 2025, it ranged from EUR 60 to EUR 90 per tonne.

The government has also long criticised extending emissions trading to road transport and heating. The EU ETS 2 system does not yet physically exist and is due to become operational in 2028, following a one-year delay.

Last week, Babiš also discussed the impact of emissions allowances, energy and motorway links with Saxony's premier, Michael Kretschmer, during his visit to Prague.