The European Union’s emissions trading system has increasingly become the focus of political debate across the continent. Politicians from various political parties argue that the EU’s climate policy – and especially the Emissions Trading System (ETS) – is one of the factors contributing to high energy prices in European industry. In their view, this has weakened the competitiveness of European companies compared with businesses operating in regions with less stringent environmental regulations.
The debate has intensified with the planned introduction of ETS2, an expanded version of the system that will cover emissions from road transport and buildings. While the existing ETS mainly affects power generation and energy-intensive industries, the new mechanism is expected to have a more direct impact on households and consumers.
Climate policy and economic competitiveness
Critics of the EU’s climate policy warn that the costs associated with emissions trading are increasingly being passed on to consumers and businesses. According to them, maintaining economic competitiveness should require a significant revision of current climate policies.
“Strengthening the competitiveness of the economy must mean that we largely withdraw from climate policy,” said Anna Bryłka, a Member of the European Parliament from the Confederation party, speaking to Newseria news agency. “Withdrawing from it would reduce the cost of living for households in the European Union.”
Bryłka emphasized that the upcoming ETS2 system will have a noticeable effect on household energy bills.
“In two years, from 2028, ETS2 will come into force and much higher costs will have to be added to the heating bills that Poles receive today,” she said. “For years climate policy mainly affected the energy sector and energy-intensive industry. Now it will affect ordinary people.”
ETS2 postponed but still controversial
Originally scheduled to start in 2027, ETS2 will now take effect in 2028 following a recently agreed compromise within the European Union. The new system will introduce emissions trading for the road transport sector and buildings, meaning that fuels used for heating homes or powering vehicles will be included in the carbon pricing framework.
For critics, this raises concerns about increasing costs for households and small businesses. Supporters, however, argue that extending carbon pricing is necessary to meet the EU’s climate targets and accelerate the transition to cleaner energy.
Calls for a revision of climate ambitions
The topic of balancing climate goals with economic competitiveness was a central theme during a debate held during the March session of the European Parliament.
According to Dariusz Joński, a Member of the European Parliament representing the Civic Coalition, the EU needs to reassess whether its climate ambitions are realistic in the current geopolitical and economic environment.
“A serious discussion will take place in the middle of this year. We have already put this issue on the agenda,” Joński said. “We believe that the targets were too ambitious and the charges too high. As Europeans, we sometimes behave as if we alone want to save the world, but at the expense of our economic competitiveness.”
He also pointed to international developments that could influence the EU’s approach to climate policy.
“After Canada withdrew from its carbon tax and after the decision by Donald Trump and the United States to withdraw from climate agreements, Europe must also slow down,” Joński argued. “Otherwise, we risk becoming uncompetitive at the current pace.”
The European Commission defends the ETS
Despite growing criticism, the European Commission continues to defend the emissions trading system as one of the EU’s most effective climate policy tools.
During the parliamentary debate, Commission President Ursula von der Leyen stressed the need to modernize the ETS so that it can respond more effectively to current economic and geopolitical challenges. At the same time, she highlighted the system’s role in reducing dependence on fossil fuels and strengthening energy security.
According to von der Leyen, without the ETS the European Union would currently be consuming around 100 billion cubic meters more natural gas, significantly increasing its dependence on imports from third countries.
The Commission also argues that the system has been instrumental in accelerating the energy transition and encouraging investment in renewable energy technologies.
Concerns about industrial relocation
One of the most frequently raised concerns by critics is the risk of industrial relocation, sometimes referred to as “carbon leakage.” This occurs when companies move production outside the EU to regions with weaker environmental regulations.
Bryłka argues that the EU’s current approach to decarbonization could have precisely that effect.
“In my opinion, industry will not decarbonize – it will simply move outside the European Union,” she said. “Outside the EU there is no restrictive climate policy, there is less bureaucracy and fewer regulations. There is no extensive reporting and compliance system, and the cost of employing workers is lower.”
According to her, this trend could lead to the loss of industrial jobs in Europe as companies relocate production to countries such as Turkey, India, or China.
She also pointed out that opposition to the ETS and broader climate policies is growing across the EU.
New climate targets for 2040
At the beginning of March, the Council of the European Union formally adopted an amendment to the EU climate law that sets a new milestone for emissions reductions. The updated framework aims to reduce net greenhouse gas emissions by 90 percent by 2040 compared with 1990 levels, as part of the broader goal of achieving climate neutrality by 2050.
For supporters of stronger climate action, such targets are necessary to address the long-term risks associated with climate change. Critics, however, argue that the pace of the transition may place excessive burdens on European economies.
Lower taxes and energy costs
Bryłka also suggested that governments have additional tools to reduce energy costs for households, including changes to national tax policies.
“The emissions trading system is the first thing the European Union can address if it wants to lower energy prices,” she said. “But member states also have their own tools. Energy in the EU is heavily taxed. Reducing VAT from 23 percent to 5 percent would be a purely political decision by the Polish government.”
She emphasized that such a measure would be consistent with EU law and could significantly reduce energy bills for households.
Lowering the VAT rate on electricity is one of the proposals included in the presidential legislative initiative “Cheap Electricity –33%.” The proposal also includes eliminating the transition fee, renewable energy charges, and the capacity fee in order to ease the burden on households and businesses.
Energy transition and future energy sources
Joński, however, believes that the long-term solution lies not in abandoning climate policy but in transforming the energy system.
He pointed to France, where electricity prices are relatively low due to the country’s extensive nuclear power sector. Poland, he noted, is only beginning its nuclear energy program but is also investing heavily in renewable energy projects.
“We are developing offshore wind farms, including what will become the largest wind farm in the Baltic Sea,” Joński said. “We are also waiting for technological progress from Canada. If small modular reactors (SMRs) prove successful, they may also appear in Poland.”
According to him, such technologies could significantly reduce energy prices in the future.
Poland’s coal legacy
Joński also argued that Poland’s high energy prices are partly the result of past energy policy decisions.
“For almost a decade, during the governments of Jarosław Kaczyński, we were told that coal was the future,” he said. “Today Poland is the last country in the European Union still mining coal on such a scale.”
He noted that coal extraction has become increasingly expensive and difficult, while renewable energy sources such as wind and solar – as well as nuclear power – are becoming significantly cheaper.
“Of course, we must maintain a few strategic mines, such as Bogdanka, as a precaution,” Joński said. “But we already know that energy from wind, solar, and nuclear power will ultimately be much cheaper.”
A continuing debate
The discussion surrounding the EU’s emissions trading system reflects a broader challenge faced by European policymakers: balancing climate ambition, affordable energy, and economic competitiveness.
While the ETS remains a central pillar of the EU’s climate strategy, growing political pressure suggests that its design – particularly the upcoming ETS2 system – may become one of the most contested policy issues in the coming years.
As Europe navigates geopolitical tensions, energy security concerns, and the urgent need to reduce emissions, the debate over the future of carbon pricing in the EU is likely to intensify.
