“Don’t mess with ETS!”

Current global unrest is once again showing that the EU’s continued fossil dependency leaves it in a vulnerable position. Decarbonising is Europe’s competitive advantage. It makes us more resilient, keeps energy affordable, and helps European clean industry grow. 

To stay on course, Europe must protect what already works: market-based tools like the ETS and an electricity market built on marginal pricing. The EU ETS is the backbone of the transition, steering investments towards fossil free solutions and helping to decarbonise industries. At the same time, a strong internal electricity market delivers lower costs and greater security of supply while marginal pricing ensures supply is met in the most efficient and reliable way. As Vattenfall’s CEO, Anna Borg, warns “don’t mess with ETS. Undermining trust in the ETS and in how electricity markets function places the hope for short-term relief over long-term strategy and weakens Europe’s competitiveness.”

Allowing currently discussed short-term interventions in the ETS and the electricity market design would not make costs disappear, but simply shift them, appearing in the form of overburdened state budgets, lost competitiveness and costs created by climate change later on. It’s like abandoning the insulation of a house halfway because it feels too costly now. The real cost shows up later, in higher energy bills, colder winters, and repair jobs that are far more expensive.

Preserving regulatory stability of these pillars is essential to sustain progress, unlock future investments and keep Europe competitive in the long-term. As Anna Borg concludes: “Regulatory stability is not a nice to have; it is what enables the massive investments required for the transition. Keep marginal pricing and the ETS as the pillars of the transition intact and give businesses the regulatory certainty needed to keep Europe in the lead. Only a decarbonized Europe is a competitive Europe."