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European Commission President Ursula von der Leyen has publicly defended the European Emissions Trading System (ETS) in the face of growing criticism from industry and some European leaders who argue that high carbon prices are harming competitiveness and jobs in the European Union. During a meeting with major industrial leaders in Antwerp, she stressed that the ETS has delivered concrete results: since 2005, emissions in the sectors involved have fallen by 39%, while the economy of these sectors has grown by 71%. According to her, these data show that decarbonization and competitiveness can go hand in hand.
Von der Leyen rejected the idea that easing or scrapping green policies would help European industry. She argued that high energy prices are mainly linked to gas, while investments in renewables and nuclear power are reducing costs. Referring to forecasts from the International Energy Agency, she said that the period of lower gas prices in the coming years should be used to invest in low-carbon energy systems, so that Europe is better protected when fossil fuel prices rise again.
However, German Chancellor Friedrich Merz suggested that the system should be reviewed if it fails to combine reducing emissions with maintaining industrial competitiveness. He said that if the ETS does not prove to be the right instrument, the European Union should be open to changing or postponing it. French President Emmanuel Macron also warned against “destroying” the ETS, but stressed that Europe cannot set ambitious climate targets while allowing its industrial base to weaken. According to him, high energy prices, combined with the cost of carbon, are accelerating deindustrialization.
The ETS forces heavy industry, power plants, airlines and shipping to pay around €80 for every tonne of CO₂ they emit. The number of pollution permits is reduced each year, gradually increasing the price and aiming to encourage investment in clean technologies. Meanwhile, some permits are still distributed for free to support industry during the transition. The EU's carbon price remains the highest in the world, while other countries have similar systems with lower fees.
Ahead of the Antwerp meeting, several leaders and industry representatives called for measures to lower the carbon price, arguing that it puts European industry at a competitive disadvantage. Some companies called for a slowdown in the phasing out of free allowances, while others proposed suspending or ending the system.
The European Commission has shown no willingness to dismantle the ETS, but has signaled openness to improvements as part of a review planned before July. Climate Commissioner Wopke Hoekstra said the system should continue, noting that some companies have invested heavily in the green transition, while others have benefited from free permits without taking sufficient steps.
One point where the Commission acknowledges the need for change relates to the use of carbon market revenues. Von der Leyen stressed that at European level 100% of these revenues are reinvested in industrial innovation, while member states use less than 5% for industrial decarbonisation. She called on national governments to increase support and align investment levels with those of the EU. She also criticised national energy taxes, pointing out that industry pays much higher taxes on electricity than on gas.
The debate on the ETS comes as the EU struggles to balance climate goals with maintaining economic competitiveness. Environmental groups supported the Commission's stance but expressed concern about increasing political pressure on the union's main climate policy.
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