Europe’s electricity sector is calling for the EU to maintain a strong carbon pricing framework as policymakers consider changes to the Emissions Trading System (ETS). The industry argues that a stable and predictable carbon market will be important in encouraging investment in renewable generation, electrification and other low-carbon technologies as Europe works towards its longer-term climate goals.
The call comes from Eurelectric, which represents more than 3,500 companies across the European electricity sector. The organisation has urged policymakers to protect the role of the ETS while making the system more predictable for businesses and investors. It points to the reductions already achieved by the power sector under the scheme and argues that carbon pricing has helped shift investment away from higher-emitting forms of generation.
The discussion comes as the European Commission prepares to revise the ETS as part of its wider approach to achieving the EU’s 2040 climate target. Proposals published in July include the creation of a €100 billion Industrial Decarbonisation Bank, alongside continued funding through the Innovation Fund and Modernisation Fund. The Commission is also proposing that Member States direct at least half of their national ETS revenues towards reducing emissions in sectors covered by the scheme.
Alongside these changes, the EU is placing greater emphasis on electrification as a way of reducing fossil fuel dependence. The European Commission’s Electrification Action Plan sets an indicative ambition for electricity to meet 46% of the EU’s energy demand by 2040, compared with around 23% today. The Commission estimates that achieving this could reduce the EU’s fossil fuel import bill by approximately €260 billion a year, while also making the energy system less exposed to fluctuations in global fossil fuel markets.
This shift has implications well beyond the electricity sector. Transport and logistics businesses are increasingly assessing electric vehicles, charging infrastructure and renewable electricity as part of their transition plans. For operators considering electric HGVs in particular, the availability and cost of low-carbon electricity will be an important factor in determining whether electrification can be scaled across fleets and depots.
The relationship between carbon pricing and electrification is therefore becoming increasingly significant. A carbon price can make fossil fuel use less attractive while improving the relative business case for cleaner alternatives, but businesses also need confidence that the wider energy system can provide the capacity and infrastructure required. How the EU balances these considerations will influence investment decisions across multiple sectors over the coming years.
There is also a wider competitiveness question behind the debate. European businesses are facing pressure to cut emissions while managing energy costs, international competition and continued geopolitical uncertainty. Policymakers therefore need to ensure that climate policy supports investment without creating additional barriers for industries already dealing with significant economic pressures.
For logistics and supply chain organisations, the developments highlight why changes to energy and climate policy need to be considered alongside longer-term operational planning. The transition towards lower-carbon transport will not depend on vehicles and fuels alone, but on the wider energy infrastructure, pricing mechanisms and policies that make new technologies viable.
As discussions around the ETS continue, businesses should keep track of how changes could affect energy costs, infrastructure investment and their wider emissions strategies. Understanding these developments early can help organisations make more informed decisions as Europe moves towards a more electrified and lower-carbon economy.
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Find out more about the EU ETS here: EU Emissions Trading System (EU ETS) – Climate Action – European Commission