Merz urges EU to preserve carbon market rules and reject further ETS2 changes
The German chancellor favours compensation for industry's electricity costs rather than weaker carbon pricing, while backing the planned 2028 launch of ETS2.
German Chancellor Friedrich Merz has asked European Commission President Ursula von der Leyen to bring carbon market reform negotiations to a swift conclusion without weakening the system. In a letter, he also opposed further changes to ETS2, which is scheduled to start in 2028.
The European Parliament and EU governments are negotiating a Commission proposal presented on 17 July to bring the Emissions Trading System (ETS) into line with the EU's 2040 climate target. Several countries want parts of the system weakened or removed, arguing that carbon pricing contributes to high electricity costs.
Merz argued that energy and industrial businesses need dependable carbon price signals for long-term investment. He favoured using existing compensation arrangements to help electricity-intensive industries with indirect carbon costs, rather than altering the ETS. His position differs from that of German Economy and Energy Minister Katherina Reiche, who has sought looser rules and an extension of free industrial emissions allowances.
ETS2 will cover fuels for road transport and building heating. Merz said an agreement reached in early 2026, postponing its introduction to 2028 and adding price-stabilisation measures, should sufficiently contain costs. He insisted that talks on ETS1 remain separate from those on ETS2.
Some member states are seeking another postponement or revisions to the mechanism that releases extra allowances when prices climb too sharply. Political negotiations between EU lawmakers and governments will begin after Parliament's plenary vote in mid-December.
