Ten EU countries, including Czechia, call for thorough review of emissions trading system

Brussels, 18 March (ČTK correspondent) - Ten countries, including the Czech Republic, are calling on the European Union to thoroughly review the EU Emissions Trading System (EU ETS). They say the European Commission should present its review of the ETS by the end of May, rather than in the summer. The letter, addressed to European Commission President Ursula von der Leyen and European Council President António Costa, was signed by the prime ministers of Czechia, Italy, Austria, Poland, Bulgaria, Croatia, Greece, Hungary and Slovakia, as well as the president of Romania. Changes to the emissions trading system will be one of the main topics at the EU summit, which begins in Brussels on Thursday.

"Europe stands at a critical crossroads. Decisions taken today on competitiveness will determine our prosperity, technological leadership and strategic autonomy for decades to come," says the letter, which ČTK has seen.

The green transition can succeed, the ten European leaders say, only if Europe retains a strong industrial base. But the global situation has changed significantly, energy prices have risen sharply, and inflation has further increased the cost of the investment needed for the transition, the EU leaders write.

"It is now becoming clear that the trajectory envisaged under the EU Emissions Trading System (ETS) through 2034 is too steep and overly ambitious," the letter says.

According to the letter's authors, European industry remains committed to continuing the transition. However, "combined with high energy prices and the gradual phase-out of free allowances under the ETS, the current framework has become an existential risk for a number of Europe's strategic sectors."

The European Commission president also said in a letter to EU leaders this week that the ETS must be adapted to the new conditions.

"To this end, we consider a thorough review of the ETS essential, with a focus on mitigating its impact on electricity prices and reducing the risk of volatility in allowance prices, including extending the free allocation of EU allowances under ETS 1 beyond 2034," the leaders of the ten EU countries write.

"Time is of the essence, so the relevant legislative proposal should not be delayed until the summer. The review of ETS 1 should be presented no later than the end of May," the document concludes.

Prague has its own proposals for changing the ETS: it wants a price cap on allowances and energy-intensive sectors to be excluded from the system. It also wants the so-called Market Stability Reserve to be strengthened, enabling the mechanism to better address excessive price fluctuations and help keep allowance prices under control in the short term.

Czech Prime Minister Andrej Babiš, who will represent the Czech Republic at Thursday's summit, has previously called the current system an "absolute disaster", saying that Czechia has so far lost almost CZK 160 billion as a result.

Babiš also raised his demand in a letter to fellow European leaders ahead of the informal summit in February at Alden Biesen Castle. He criticised the trend in ETS 1 allowance prices and called for a delay to the launch of ETS 2, which would extend the system to road transport and building heating.

In a separate letter signed by eight countries, the Netherlands, Denmark, Finland, Portugal, Spain, Sweden, Luxembourg and Slovenia defended the ETS and urged Brussels not to weaken it. They say it is a cornerstone of European climate policy.

The European Commission president defended the system in Strasbourg last week. "Without this system, the EU would be even more vulnerable and dependent. The Union needs the emissions trading system, but it must be modernised," she told MEPs.

ETS 1 is Europe's main emissions trading market and covers energy, heavy industry and aviation in the EU. ETS 2 is expected to come into operation in 2028, following a one-year delay.