Von der Leyen said:<\/p>\n
\u201cThe Emissions Trading System is working. It has massively reduced gas consumption. Because of that, it has reduced our dependency on imports of fossil fuels, and it has reduced our vulnerability. And it has driven major investments in the energy transition in the low-carbon energy sources like renewables and nuclear<\/a> that are homegrown and give us independence. But we need to modernise it and make it more flexible.\u201d<\/p>\n What Is the EU Emissions Trading System and Why Change It?<\/strong><\/p>\n The EU\u2019s Emissions Trading System is the bloc\u2019s main carbon pricing<\/a> tool. It was set up in 2005 to reduce greenhouse gas emissions from major industrial sectors. These include electricity and heat generation, steel, cement, chemicals, and commercial aviation.<\/p>\n Under the ETS, companies must buy permits for each ton of carbon dioxide they emit. The total number of permits is capped to reduce emissions over time.<\/p>\n Over nearly two decades, the ETS has helped reduce Europe\u2019s dependence on fossil fuels and encouraged investment in cleaner energy. It is often viewed as a cornerstone of the EU\u2019s climate policy.<\/p>\n The EU ETS continues to generate large revenues that fund climate action across Europe. In 2025, total ETS auction revenues exceeded \u20ac43 billion<\/a>, with about \u20ac24 billion going directly to EU member states.<\/p>\n The remaining funds were allocated to EU-level programs such as the Innovation Fund, Modernisation Fund, and the Social Climate Fund. Overall, ETS revenues since 2013 have surpassed \u20ac258 billion, making it one of the world\u2019s largest carbon market<\/a> funding sources.<\/p>\n However, rising energy costs are pressuring European industries. They started with the war in Ukraine and are now impacted by conflicts in the Middle East. Some member states have asked for a review of the ETS to ease short\u2011term burdens.<\/p>\n Planned changes \u201cin the next days\u201d may include:<\/p>\n Future changes will seek a \u201cmore realistic trajectory.\u201d They may also extend free allocation for some industries past 2034.<\/p>\n Carbon Pricing in Europe: The Stakes and the Context<\/strong><\/p>\n Carbon pricing has been a key driver of investment in clean energy. ETS prices influence how companies weigh fossil fuels versus low\u2011carbon options. In recent weeks, ETS prices have fluctuated, partly in response to talks about reform and broader energy market volatility.<\/p>\n Recent reports noted that benchmark EU carbon prices<\/a> jumped almost 10% after policy statements from EU leadership.<\/p>\n Market stability is a core concern. The ETS\u2019s design includes mechanisms to support consistent carbon prices, especially during times of economic stress. A strong and predictable carbon price can help investors commit to long\u2011term clean energy projects. Conversely, sudden changes can raise costs for industrial players and weaken investment incentives.<\/p>\n At the same time, formal industry and civil society groups have called for regulatory certainty. They say stable carbon pricing is key for planning big clean energy projects. It also helps the EU keep its role as a leader in global climate efforts. These groups emphasize that unpredictable policy shifts could slow clean industrial growth and raise risk for new projects.<\/p>\n A New \u20ac30 Billion Cleantech Fund to Boost Decarbonization<\/strong><\/p>\n Alongside ETS reform, von der Leyen announced plans for a \u20ac30\u202fbillion ETS Investment Booster. This new fund will support decarbonization and clean technology projects across Europe. It will be financed by revenues from the ETS, meaning carbon pricing will help fund climate action directly.<\/p>\n The booster fund will operate on a \u201cfirst-come, first-served\u201d basis to support ready\u2011to\u2011deploy projects. Von der Leyen said that the fund will ensure access for lower\u2011income member states. This is intended to promote fairness across the EU and help balance regional disparities in clean technology investment<\/a>.<\/p>\n The new fund complements existing EU climate finance mechanisms. The Innovation Fund has backed many projects. These include renewable energy, energy storage, and industrial decarbonization.<\/p>\n In 2024, the Innovation Fund<\/a> provided \u20ac4.8 billion in grants. This supported 85 innovative net-zero projects. These efforts helped reduce nearly 476 million tonnes of CO\u2082 in the first decade.<\/p>\n Expanding funding sources for clean industrial investments reflects a broader EU trend. The Clean Industrial Deal<\/a>, launched in 2025, plans to raise over \u20ac100 billion. This funding will support clean technology manufacturing, create jobs, boost energy efficiency, and promote circular economy solutions.<\/p>\n Renewables, Baseload, and Energy Market Trends in Europe<\/strong><\/p>\n The EU\u2019s net\u2011zero journey sits against a backdrop of changing energy markets. Renewable energy deployment in Europe continues to grow rapidly.<\/p>\n Wind and solar now make up an increasing share of electricity generation in many member states. These technologies are expected to gain further market share as costs fall and grid integration improves.<\/p>\n However, the need for stable and resilient power systems<\/a> has grown. Renewable sources like wind and solar are variable by nature. This increases interest in baseload options like geothermal, hydropower, nuclear, and storage paired with renewables.<\/p>\n Meanwhile, global energy prices have remained volatile. Brent crude prices rose above $110 per barrel due to geopolitical tensions. This increase is driving up electricity and heating costs in Europe. These price swings can influence industrial competitiveness and household energy bills.<\/p>\n![\"EU](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/03\/EU-ETS-revenue-2025-300x300.jpg\"\/)
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<\/p>\n![\"European](\"https:\/\/carboncredits.com\/wp-content\/uploads\/2025\/09\/European-Union-energy-demand-under-net-zero-300x185.jpeg\")
<\/p>\n![\"Europe](\"https:\/\/carboncredits.com\/wp-content\/uploads\/2026\/01\/Europe-renewable-power-capacity-forecast-2030-300x201.webp\")
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![\"EU](\"https:\/\/carboncredits.com\/wp-content\/uploads\/2025\/04\/EU-2040-climate-goal-300x169.png\")
Source: EC<\/p>\n