The EU ETS is under review
Energy cost surge fires up debate over EU ETS
Role of world’s largest carbon cap-and-trade market under scrutiny as war in Iran threatens to drive EU energy costs to unsustainable levels
The consensus within the EU on the benefits of the EU ETS, a mainstay of the bloc’s decarbonisation strategy, has started to fray as the US-Iran conflict inflates energy prices. Increasingly vociferous critics of the system, the world’s largest carbon cap-and-trade compliance market, argue it is weighing on the competitiveness of the EU’s industries by imposing policy-driven carbon costs on them, on top of surging energy prices. The price of allowances traded in the system has dropped by about 20% since the start of 2026 amid an increasingly fiery debate over its design and scope. Surging oil and gas prices, driven by the war in Iran, have sharpened that debate as rising energy costs start t
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