According to the President of the European Commission, the EU’s CO2 emissions trading system needs to be modernised and made more flexible. Work is already under way on specific changes, which are expected to be ready by July 2026. In the European Parliament, there is also growing support for reforming the ETS and postponing the implementation of ETS2 by several years. At the same time, there is no shortage of voices calling for the system to be scrapped altogether.
“We have the war in Ukraine, the conflict in the Middle East, and concerns over fuel supplies. We also have consumers who can only bear a certain level of costs and financial burdens. Looking at all these issues, after in-depth analysis, discussions and pressure, our delegation is increasingly convinced that ETS rules need to be revised and made more realistic so that they do not kill the European economy, the labour market and competitiveness,” Elżbieta Łukacijewska, a Member of the European Parliament from Civic Coalition and a member of the European People’s Party, told Newseria.
The ETS has been in operation since 2005. It is the first and one of the largest carbon emissions trading markets in the world. It is based on the “cap and trade” principle and applies to a cap set on the total amount of greenhouse gases that can be emitted by the installations and operators covered by the system.
“Changes are necessary. Ideally, ETS2 should be postponed for as long as possible, for as long as conflicts and current problems persist. We must realise that these are also funds for various restructuring and renovation projects that also help reduce emissions. What is needed is a common-sense approach, not the one represented by the Socialists, Renew or the Greens, according to which everything must be restricted and anything that pollutes must be thrown out. As if the air above Europe stood still and, if only we protect it and reduce emissions, we would all be beautiful, healthy and live long lives, while everyone else would continue functioning in a polluted environment. Unfortunately, that is not how it works,” Elżbieta Łukacijewska argues.
According to the European Environment Agency, emissions from stationary installations in Europe fell by 51% between 2005 and 2024. Based on member state projections, emissions are expected to fall further by 2030, reaching reductions of over 60% compared to 2005 levels, depending on the policy scenario.
“In my view, the ETS is a mistake. The changes introduced by Green Deal-related regulations, but mainly by the ETS, have brought the European economy into serious difficulty. Today, we also hear this from representatives of the Commission. President Ursula von der Leyen said in the European Parliament in Strasbourg that we need the ETS, but it must be modernised. That means the problems arising from it have finally been recognised,” says Beata Szydło, a Member of the European Parliament from Law and Justice and a member of the European Conservatives and Reformists.
According to the European Commission, the ETS is a key driver of decarbonisation that has already reduced fossil fuel use, lowered the EU’s dependence on imports and cut CO2 emissions. For this reason, Ursula von der Leyen believes the ETS must be maintained, but that it needs to be modernised and made more flexible.
During a conference on 19 March, the Commission President referred to four measures being prepared. These include updating benchmark levels for free allocations to reflect industry concerns and increasing the Market Stability Reserve in order to reduce price volatility. Another area under discussion concerns medium-term measures, including the issue of free allowances for industry after 2034. A further priority is support for investment in decarbonisation and clean technologies, including the planned ETS Investment Booster programme with a budget of €30 billion.
“Modernising this system, meaning imposing additional charges, will change nothing. It should be abandoned, and we should consider in what other way the transition can be carried out,” Beata Szydło argues. “We need to look for new solutions that, on the one hand, take into account the interests of all member states, not just some of them, and guarantee security for Europe and the European economy. On the other hand, they must not lead to ever higher living costs for Europeans and should respond to the challenges currently facing Europe and the whole world.”
In mid-March, Poland’s Ministry of Climate and Environment also presented its own proposals for changes to the system. The ministry is calling for the mandatory implementation of ETS2 by 2030 to be dropped and for a higher allocation of free allowances for industry, including sectors already covered by other protective mechanisms such as CBAM. Poland is also seeking stronger safeguards against speculation in the system and lower ETS-related costs for the defence industry.
“ETS2, which raises so much fear and doubt, will affect every citizen of the European Union. It will mean reaching directly into people’s pockets, above all because of the need to adapt houses, flats and buildings. It will also create additional problems for those using combustion-engine cars. It will affect local governments too, because they manage public buildings and facilities. The list of potential problems goes on and on,” says the PiS MEP.
ETS2 is to cover greenhouse gas emissions generated by fuel combustion in buildings, road transport and additional sectors, mainly small industries not covered by the existing ETS1.
“Let us not forget that the European Union accounts for only just over 6% of global emissions. The rest of the world is not particularly concerned that Europe wants change, wants to be a leader in reducing emissions and switching to green energy. What is needed, therefore, is common sense, and I believe that is what guides our group. We are waiting, but we are also putting pressure on the Commission to issue a communication on ETS2,” says Elżbieta Łukacijewska.
In February this year, the European Parliament decided that the introduction of the EU’s ETS2 system would be postponed from 2027 to 2028.
“With regard to ETS2, from Poland’s perspective what would be important, first of all, is a further delay. What also matters is changing the requirements and restrictions, because the targets being set are not achievable, either in the short or in the longer term. Poland is already bearing an enormous burden of transformation across many sectors of industry. We must keep in mind that additional burdens are grist to the mill for all anti-European parties, which, if they won a majority here, would destroy everything good we have achieved in environmental protection,” says the MEP from Civic Coalition. “Let us not forget that clean air means longer lives without disease. In Poland, many people die as a result of polluted air, not to mention how many fall ill, suffer various complications, and what costs this generates for society. So certainly lowering the required targets in the long term, and postponing implementation in the short term, would be a good first step.”
