Energy, ECCO: “The solution is not to delay ETS2.” The EU is focusing on the energy transition and investment

Brussels – The energy transition remains the structural solution to the price crisis, while temporary measures must address the emergency without altering the trajectory of investment. This is the view of Matteo Leonardi, executive director and co-founder of ECCO, the Italian climate think tank, following the European Council meeting on 15 and 16 October, which confirmed the role of electrification and renewables in strengthening the EU’s strategic autonomy. 

“The European Council confirms the transition as the path out of the crisis, through electrification and renewables,” notes Leonardi, who also welcomes the reaffirmation of the role of the European Emissions Trading System (ETS) and the need for transitional measures to tackle the crisis, provided they do not alter the overall trajectory. 

With regard to ETS2, the extension of the carbon market to buildings, transport and other sectors, Leonardi emphasises that no postponement has been decided, but that a new impact assessment has been requested. “The challenge is to reconcile short-term needs with the necessity of creating stable conditions for investment in the transition,” he says. “The solution is not to postpone ETS2, but to recognise the funding priorities for the energy transition in national budgets.” 

The conclusions of the European summit confirm this approach, while leaving the debate on measures to contain costs open. The leaders have asked the Commission to update its assessment of the impacts of ETS2, particularly with regard to the structure of the system and its safeguards. They have also called for the review of the market stabilisation reserve to be brought forward, in order to moderate excessive fluctuations in the prices of emission allowances. 

The objective set out by the 27 Member States is to make the carbon market more predictable and to reduce the impact of the CO₂ price on electricity, while preserving the role of the ETS in driving investment and innovation. To tackle high energy prices, the Council is also calling for coordinated, targeted and temporary European measures that take account of national specificities and safeguard the integrity of the single market.