Although there are a few noisy opponents of the EU’s carbon pricing scheme, CMW’s Jeanne Marullaz reports that there are clear signs of support actually growing for the Emissions Trading System as a driving force of both climate action and European competitiveness –  from civil society to governments and industries

The EU Emissions Trading System (ETS) has always been a favourite punching bag of the far right and climate deniers across the EU. The last few weeks have been no different, as attacks have mounted on the European Union’s key climate policy instrument. 

Galvanised by misguided comments from EU political leaders at the February industry summit in Antwerp and the informal EU leaders’ retreat in Alden Biesen, several energy-intensive industry groups have sounded the battle cry to weaken the EU carbon market in the name of competitiveness. And there has also been intense pressure from several European governments, including Slovakia and the Czech Republic, or Italy, which has openly called for a suspension of the system.

These highly visible attacks arrived just days ahead of EU leaders gathered in Brussels to discuss Europe’s economic future and energy prices, and only a few months before the European Commission will present its proposal for an ETS revision.

But while noise from certain political and industrial agitators may initially suggest a growing backlash against carbon pricing, the reality is somewhat rosier. Vocal support for the ETS has been even louder and emerging from all corners –  from civil society to governments, companies and industrial associations. 

Although those leaping to the defence of the ETS start from a different angle, they all converge at the same point: scrapping or weakening the ETS would be a major mistake. Messing with the ETS has substantial negative repercussions for the climate, the EU’s economy, investment certainty and industrial transition, and undermining it would only deepen the challenges Europe already faces.

Industry pushback: manufactured?

One of the main arguments driving the recent pushback is the so-called “Antwerp call to Alden Biesen”, a widely circulated declaration to cut carbon costs presented as representing the position of more than 1350 companies. Yet the claim quickly unravelled (thanks to Finnwatch) as investigations showed that the campaign lacked a signatory list and was later disavowed by several firms it supposedly represented. It has been rumoured that dozens of companies reportedly requested to be removed from the CEFIC-led “Antwerp call to Alden Biesen” yet were still being listed as supporters.

This raises serious concerns about the misrepresentation of industry positions that are being advanced by some of Europe’s most influential business associations, and the misleading tactics being used by those seeking to hamper the EU’s approach to the climate (and the emerging energy) crisis.

Several of the associations promoting the letter have historically taken far more negative positions on EU climate policy than many of the companies they claim to represent. Similar controversies have surfaced before. At a closed-door industry meeting in Evian last September, TotalEnergies and Siemens were reported to have misrepresented the views of several participants, creating the impression of broader opposition to EU climate policy than actually existed.

And this is all the more concerning given the privileged and timely access industry representatives enjoy with policymakers. When closed-door summits allow a handful of industrial lobby groups direct channels to shape political discussion, while civil society and labour representatives remain largely absent and their approaches even declined, misleadingly skewed positions risk shaping political debate and policies towards pernicious outcomes. The Commission should ensure its own safeguards are respected, including transparent consultation processes, proper impact assessments, credible evidence for policy proposals, and meaningful participation from all stakeholders, rather than allowing narrow lobbying interests to dominate the conversation.

When the debate is broadened beyond a handful of industry voices, a fuller picture quickly emerges. Only days after the Antwerp summit, a far broader and more comprehensive coalition of stakeholders stepped forward to defend the EU carbon market.

The real competitiveness problem

Blaming the EU ETS for Europe’s competitiveness challenges fundamentally misdiagnoses the problem.

The EU ETS has proven to be a catalyst that inspires industrial competitiveness and innovation. The carbon market is ‘an ally, not an enemy, of industrial competitiveness’ by strengthening the business case for green production, setting a clear long-term investment signal, and generating revenues that can be reinvested into Europe’s decarbonisation. The ETS is crucial to promoting Europe’s independence, security, and competitiveness.

Europe’s major economic vulnerabilities stem from its continued dependence on expensive and volatile fossil fuels. The US and Israeli war on Iran once again highlights how fossil fuels drive violence and suffering, but also exposes European economies to price shocks and instability.

Weakening the ETS would not solve these structural challenges. On the contrary, it would undermine investment certainty and reward companies that delay decarbonisation, all while penalising innovators and early movers who have already invested in cleaner technologies.

Carbon pricing is not the problem; it is part of the solution and this explains why such a diverse range of stakeholders are rallying to defend it.

A broad coalition defending a strong ETS

Carbon Market Watch and partner organisations have mobilised quickly against calls to weaken the ETS, by urging EU leaders to safeguard the system’s integrity and predictability. 

This collective effort is underpinned by recognition of the fundamental climate action principles that guide the EU’s highly effective carbon pricing machine including maintaining a stable carbon pricing framework, upholding the polluter-pays principle throughout the phase-out of free allowances, following the agreed emissions cap trajectory, protecting the Market Stability Reserve, and strategic deployment of ETS auction revenues.

At the same time, more than 270 organisations are supporting a civil society counter-summit in response to the Antwerp industry gathering, calling on EU policy setters to prioritise democratic accountability and climate ambition over corporate lobbying.

But support for the ETS goes far beyond civil society.

Clear message from business and industry

More than 100 major European companies – including EDF, Volvo Group, Heidelberg Materials, Holcim, Vattenfall and Tata Steel – issued an open letter to EU leaders, this time with a clear and transparent list of signatories. Their message is straightforward: Europe’s industrial future depends on a stable carbon price signal.

The companies argue that the real drivers of so-called competitiveness challenges are structural, such as fossil-fuel-driven energy prices, global industrial overcapacity, and the fragmentation of the EU single market, not climate policy. Undermining the ETS, they warn would leave the EU without a serious game plan to compete in the necessary cleaner future. The companies also highlight that the political debate around weakening the ETS is already creating uncertainty among investors and decelerating finance for industrial decarbonisation.

They also call for targeted improvements to the system rather than weakening it. Among their priorities: using ETS revenues more strategically to support industrial electrification, enabling long-term clean power purchase agreements for industry, ensuring smooth functioning of the Carbon Border Adjustment Mechanism (CBAM) and extending it to additional sectors and products if needed, improving access to clean energy infrastructure and accelerating deployment of breakthrough technologies through the Innovation Fund and Modernisation Fund.

Nordic business federations have echoed these concerns in another letter, stressing that the ETS is vital for financing clean energy infrastructure, electrification and industrial decarbonisation. Without a strong EU carbon price, they warn, the burden of financing the transition would increasingly fall on national budgets.

Clean energy and industry associations in a joint statement coordinated by WindEurope, have also warned that policy stability is essential for investment in clean energy and industrial decarbonisation. Short-term political interventions in the carbon market, they caution, risk raising the cost of capital and delaying major investment decisions. With around €43 billion in ETS revenues generated in 2025 alone, the carbon market also represents a powerful tool to strengthen Europe’s competitiveness by reinvesting those funds into clean technologies and infrastructure.

The “cornerstone” of EU climate policy

Governments are also showing support. Ahead of a series of Council meetings in Brussels, eight member states – Portugal, Spain, the Netherlands, Luxembourg, Slovenia, Denmark, Finland and Sweden – circulated a joint paper urging the EU to preserve the integrity of the ETS. The countries describe the carbon market as the “cornerstone” of EU climate policy, warning that suspending or fundamentally weakening it “would constitute a very worrying step backwards, not only in terms of climate ambition, but also in weakening the carbon price signals that underpin investment and market stability”. The paper acknowledges that targeted adjustments to address short-term volatility may be appropriate, but stresses that these must not undermine the purpose of the system.

A Nordic–Iberian coalition of leaders representing Denmark, Finland, Portugal, Spain and Sweden reinforced that message in a separate letter. The five prime ministers argue that climate ambition is itself a foundation for competitiveness, particularly for a continent with limited domestic fossil fuel resources and high exposure to geopolitical energy shocks. They warn that attempts to weaken or suspend the ETS would penalise early movers, distort the level playing field and undermine investor confidence. Crucially, they also clearly defend the phase out of free allowances, pushing back against recent remarks to the contrary from Germany’s Chancellor Friedrich Merz stating, “A progressive phase-out of free allocation is imperative to ensure incentives for industry to transition and decarbonise the economy while preserving competitiveness.”

Support is also emerging in cross-stakeholder coalitions. In the Netherlands, for example, Tata Steel and environmental organisation Natuur & Milieu have jointly called on the Dutch government to push for maintaining a strong ETS and strengthening the CBAM, highlighting how climate policy can both drive emissions reductions and ensure fair competition.

Finally, the response of the EU executive has been positive. DG CLIMA Director-General Kurt Vandenberghe has reiterated that the ETS is delivering: cutting emissions, rewarding innovation, generating revenues to finance the transition and helping Europe reduce its dependence on imported fossil fuels, and his call to policymakers sings a similar tune to that of CMW: don’t mess with the ETS.

Policymakers take note: support for ETS is growing

Taken together, these statements send a clear signal ahead of the ETS revision proposal expected for July 2026 (and the promised, yet vague, MSR proposal due ‘in days’). Diverse stakeholders representing companies, governments, industry groups and civil society are all beating the drum for a strong and predictable ETS. Support is broad and growing.

Stakeholders have their own specific approach towards improving the system, but none call for its dismantling. They all acknowledge its importance for the EU economy and stability. The real risk for Europe’s competitiveness is not climate policy, but a continued dependence on volatile fossil fuels and the uncertainty created by political attempts to unravel long-term climate frameworks.

The overwhelming support has already had an impact, member states have already backpedaled on their criticism and the conclusions of the March EU summit call for “preserving the essential role of the EU ETS in the climate and energy transition”. Furthermore, German Chancellor Friedrich Merz retracted his criticism, calling the ETS “a success” and claiming that “they are not calling [it] into question”.

EU policymakers should now focus on strengthening the ETS, because when the debate expands beyond a narrow set of voices, one conclusion becomes increasingly clear: the ETS is – and must remain – one of the EU’s most important tools for driving both industrial decarbonisation and economic resilience.