According to diplomats familiar with the talks, Italian Prime Minister Giorgia Meloni and Czech Prime Minister Andrej Babis intend to reopen the carbon-market dispute during a Tuesday meeting in Prague. Their ask is to put off the 2028 step that would bring heating and road transport fuels into the EU's Emissions Trading System, the add-on commonly referred to as ETS2.
Their rationale, per those diplomats: with prices still elevated, expanding the market now would hit the buildings and transport sectors and strain people's purchasing power.
A group of six countries is pushing back on another delay after the expansion had already slipped by a year. Denmark, the Netherlands, Spain, Finland, Sweden and Luxembourg warned in a document shared with other EU governments, "We are concerned by recent calls for further amendments to and postponement of ETS2." They added, "Going forward, EU businesses and households need political stability and predictability."
That split captures the EU's balancing act. The bloc wants to stay on track for net zero by 2050 without undercutting its competitiveness with the US and China or prompting voter blowback over higher costs. Elections next year in France, Italy, Spain and Poland only raise the political temperature.
Since the war started, the price of gas in Europe has climbed to over twice its earlier level, and earlier in September it reached the highest point since late 2022. Power has jumped too, with prices up around 77% in France and roughly 60% in Germany.
To ease concerns about adding ETS2 on top of that, the European Commission has outlined tools to prevent sharp price moves and soften energy cost worries. EU ministers are expected to sign off on those tweaks on Oct. 9 in Luxembourg. Beyond the ETS2 timing fight, Meloni and Babis also plan to discuss a wider revamp of ETS1, the current carbon market, put forward by the commission in July.
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They want measures to shield European companies from new costs by temporarily allowing rules that loosen how free emission permits are used in energy‑intensive industries like ceramics, steel and cement. They also want to lessen how carbon prices affect electricity by, for a limited period, capping the degree to which emission costs are passed into wholesale power prices. And they favor tighter transparency and oversight, with closer monitoring by the European Commission, the European Securities and Markets Authority and the EU Agency for the Cooperation of Energy Regulators.
Established in 2005, the EU's cap-and-trade system sets progressively tighter emission caps for more than 10,000 installations across industries such as steel, cement and chemicals. Across the bloc, carbon charges make up about 11% of the average electricity bill, with a bigger effect where fossil fuels dominate. In Poland, that share can reach as high as 24%.
Whether ETS2 stays on schedule, slips again, or gets paired with stronger buffers will ripple into energy bills and industrial margins, which eventually feed into consumer prices and earnings. With politics heating up and climate targets fixed, watch for signals on price safeguards, free permit flexibility and how much of carbon costs power producers can pass through.
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