The 27 EU Member States deadlocked over the ETS; state aid is the only solution to high energy prices

Brussels – Greater flexibility and new measures to tackle high energy prices and the cost of living? At the meeting of the 27 EU heads of state who gathered today (15 October) for the European Council, agreement is proving hard to reach. Particularly on the issue of the  ETS emissions trading scheme. Here, European sources reported that the Visegrad Group – comprising Poland, the Czech Republic, Slovakia, and Hungary – together with Italy, Cyprus, and Greece – have proposed postponing the entry into force of the ETS2, which extends the carbon market to buildings and road transport, pushing back the planned implementation date from 2028. Conversely, the Member States with the most ambitious climate targets have expressed their opposition after Finland, Sweden, and Denmark warned Brussels this morning of the danger of watering down the ETS. In a letter, the three countries emphasised that the system “has been the main driver of this transition” and that any “weakening would undermine the predictability on which investment decisions depend and risk slowing the pace of industrial decarbonisation.” 

In general, however, according to reports coming out of Brussels, the only extraordinary measures with a “short-term” impact on high energy prices are state aid schemes, for which the EU will extend the Temporary Framework for Energy. 

The energy issue took longer than expected, to the extent that the discussion on the multiannual financial framework (MFF) did not begin until late afternoon, while the issue of enlargement will be addressed after dinner. On the budget issue, two blocs of countries are on opposing sides: the “frugal” states and the “Friends of Cohesion”. EU sources have reported that today is the “time to sit down and agree on a common position so that we can listen to one another” and that, at a later stage, the President of the European Council, António Costa, will work on the text ahead of the December European Council. The sources also hinted that there will be cuts amounting to “millions of euros” and that the decision has been postponed until the end of the year. 

At the end of the first day of the European Council, it therefore appears that many items on the agenda have been discussed without any final conclusions being reached. Meanwhile, the Ukrainian President, Volodymyr Zelensky, has arrived at the European Parliament, a day earlier than planned. No details have been released regarding his schedule of meetings, but what is certain is that tomorrow morning he will hold talks with all the heads of state and government on the second day of the European Council’s proceedings.