• Italy, Poland and eight other EU countries want Brussels to reconsider ETS2 before its planned launch in 2028.
• The coalition argues that carbon pricing on heating and transport fuels could increase household costs during economic and geopolitical uncertainty.
• The dispute could reshape negotiations over the EU carbon market, industrial support and the financing of Europe’s clean energy transition.

Ten European Union countries have urged the bloc to reconsider its planned carbon price on heating and transport fuels, opening a new political front over Europe’s climate policy.

Italy and Poland are leading the challenge to the system, known as ETS2. The measure is scheduled to take effect in 2028 after EU policymakers delayed its introduction by one year.

Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Romania and Slovakia also signed the joint statement. It was submitted to the European Commission ahead of its wider review of the EU Emissions Trading System.

The coalition warned that the new charge could place additional pressure on households already dealing with high energy prices and geopolitical uncertainty.

“European citizens should not be facing new climate taxes in current economic and geopolitical circumstances. ETS2 should be therefore addressed directly in the revision and carefully reconsidered,” the statement said.

Carbon pricing meets affordability concerns

ETS2 will introduce a carbon price for fuels used in buildings, road transport and smaller industrial facilities. Fuel suppliers will purchase allowances covering the emissions generated by the products they sell.

However, those costs could be passed through to consumers through higher petrol, diesel and heating bills. That risk has made ETS2 one of the EU’s most politically sensitive climate measures.

The policy is intended to reduce emissions from sectors where progress has been slower than in electricity generation and heavy industry. Carbon pricing would encourage households and businesses to adopt electric vehicles, heat pumps and energy-efficient buildings.

Supporters, including Germany and Sweden, argue that delaying or weakening the system would reduce the incentive to move away from fossil fuels. They also point to safeguards designed to limit the impact on vulnerable households.

Revenue from the system will support national climate programmes and the EU Social Climate Fund. That fund is intended to finance building renovations, cleaner transport and targeted income support.

Yet the ten-country coalition argues that these protections may not prevent near-term price increases. Governments facing cost-of-living pressures are increasingly wary of policies that impose visible costs on voters.

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Coalition seeks wider ETS concessions

The countries also want changes to the existing EU carbon market, which covers power plants, industrial facilities, aviation and shipping.

Under the ETS, companies must obtain allowances for every tonne of carbon dioxide they emit. The supply of allowances declines over time, raising the cost of pollution and encouraging investment in cleaner production.

The coalition has called for more free allowances to be allocated to European industries without broad conditions. Free permits help protect sectors such as steel, cement and chemicals from carbon leakage and overseas competition.

The Commission has taken a different position. It has indicated that additional free allowances should be tied to credible commitments to invest in industrial decarbonisation within Europe.

That condition reflects growing concern that carbon-market support should deliver measurable investment rather than delay emissions reductions. It also links climate policy with the EU’s wider competitiveness and industrial strategy.

For companies, changes to free allocation rules will affect capital spending, carbon liabilities and the economics of low-carbon projects. Investors will also watch whether the reform provides long-term certainty or introduces new political risk into carbon-price forecasts.

Political dispute tests EU climate governance

The dispute exposes a widening divide between governments focused on affordability and those defending firm carbon-price incentives.

Any changes will require negotiations among EU member states and the European Parliament. The ten-country bloc could therefore become a significant force during the legislative process, particularly if it attracts support from other governments concerned about consumer prices.

For corporate leaders, the debate creates uncertainty around fuel costs, clean technology demand and transition planning. Companies operating in buildings, transport and energy supply will need to prepare for ETS2 while monitoring the possibility of further revisions.

The outcome will extend beyond Europe. The EU carbon market remains a reference point for emissions trading systems worldwide. Weakening its consumer-facing expansion could encourage similar political resistance elsewhere.

Brussels must now balance climate ambition with public acceptance. How it manages that tension will influence European investment, industrial policy and the credibility of carbon pricing as a tool for reaching net zero.