EU leaders are preparing to tackle soaring energy prices as oil and gas supply disruptions in the Strait of Hormuz roil markets ahead of their summit next week in Brussels.
“Recent spikes in the prices of imported fossil fuels demonstrate that the energy transition remains the most effective strategy for achieving Europe’s strategic autonomy,” say leaked council draft conclusions of the 19-20 March summit, seen by Euobserver.
But the document’s attention is mostly devoted to short-term price fixes, including revisions of the emissions trading system (ETS).
The goal, it says, is “to mitigate its impact on electricity prices,” and “reduce the volatility of the carbon price” while “preserving the essential role” of the system in driving climate and energy-related investments through “pricing signals.”
The ETS system introduced in 2005 prices carbon and makes cleaner production methods more attractive. But Europe’s oldest climate policy has come under pressure from some governments and parts of the industry as they look for quick fixes to cut energy bills.
The draft text — which is liable to change — asks the EU Commission to reduce both the volatility of the carbon price and its knock-on effect on electricity costs, while stopping short of calling for a complete suspension (as some member states, including Italy, have demanded).
EU leaders are also expected to call for “concrete actions” to lower wholesale and retail power prices, in the “short term,” suggesting national capitals are pushing for more market intervention to limit price movements.
A recent paper commissioned ahead of next week’s council meeting by industry group Eurelectric and written by Berlin-based consultancy Neon warned against such market interventions, arguing that they would distort the market, create uncertainty for investors, and generally “cause more harm than good.”
Lower wholesale prices, it argues, automatically trigger higher subsidy payments, with the bill eventually returning to consumers through levies or taxes. The overall system would not become cheaper, while obscuring where costs lie.
Source: Neon
Similarly, lowering carbon prices could reduce power prices, but would also reduce revenue from the ETS system and remove incentives for cleaner power production.
This would run counter to the draft conclusions’ own aim of keeping carbon pricing “intact” as a signal that “drives” clean investment.
This article was updated on 10 March 2026 to clarify that, contrary to earlier reports, the ETS revision is proceeding as scheduled and is not being fast-tracked.