European carbon prices are falling as German company Merz says the EU ETS may need to be upgraded
On February 12, European carbon prices traded near six-month lows after German Chancellor Friedrich Merz said the EU's emissions trading system should be reviewed or postponed if it undermines industrial competitiveness, comments that could change the course of the debate at the EU leaders' summit.
As of 12:07 GMT on February 12, according to the Intercontinental Exchange, surcharges in the EU amounted to 73.01 euros per ton of CO2e (86.75 million dollars per ton of CO2e), which is the lowest since August 14.
Since January 15, euro prices in the EU have fallen by almost 20 euros per ton per year amid news that the European Commission is planning to reform the EU ETS, with changes expected regarding free distribution and restrictions on the provision of benefits.
"This[EU ETS]system is not designed to generate new revenue. This system has been implemented to reduce CO2 emissions and, at the same time, to enable companies to switch to CO2-free production lines," Merz said at the European Industrial Summit in Antwerp in late February. 11. "If this is unattainable and if it is an unsuitable tool, we should be prepared to review it or at least postpone it, as we did with ETS2 in the EU."
Other European leaders have taken a similar position on reforming the bloc's carbon market.
On February 12, ahead of the EU summit, Czech Prime Minister Andrej Babis said that EU benefits "destroy our industry" and called for a review of the ETS, arguing that carbon prices should be limited to 30 euros per ton of CO2 per year to save European industry.
High carbon emissions and energy costs
Merz acknowledged that the EU is seriously discussing this issue and assured industry representatives that steps will be taken to address their concerns.
"The main issue in this situation is the EU ETS issue, but please note that we are talking about this in the EU Council," Merz said. "We have received some very harsh comments from colleagues from the east, as well as from the western parts of the EU."
Merz's intervention is caused by the fact that European producers are facing increasing pressure due to high energy costs and carbon prices, which exceeded 90 euros per ton of CO2e in mid-January.
The comments indicate a growing political willingness to review the pace of implementation of the EU's climate policy if it threatens industrial production and jobs.
According to the meeting's agenda, at the summit, EU leaders will discuss "Europe's competitiveness in a changing geo-economic context."
Merc's comments follow a speech by the President of the European