EU’s Emission Trading System ETS2 is probably not going to be further postponed, now it is essential to enforce a reasonably low price of carbon emission allowances, MEP Ondřej Krutílek (ECR/CZE) says in an interview. The recently launched Carbon Border Adjustment Mechanism (CBAM) was well-intentioned, but the system contains many loopholes and needs to be adjusted.
Mr Krutílek, in your opinion, is another postponement of ETS2 realistic? How about further adjustment to the system, capping the price of allowances, limiting the range of companies covered by the system, and so on?
I don’t think another postponement of ETS2 (Emission Trading System covering emissions from fuel combustion in buildings, road transport and additional sectors) is likely. That does not mean, however, that we should give up. The launch of ETS2 has already been postponed once, thanks to pressure from then-Czech government and our initiative in the European Parliament. The negotiations were extremely difficult at the time. We pushed for a longer postponement, but one year was the maximum that could be achieved in that moment. Still, we will try again and again.
The mood has not changed significantly since then. Most member states are already counting on ETS2 at home. Within the European Parliament, the Greens, the Left, and a large part of EPP and Renew groups are not willing to move in that direction. (On Tuesday 10 February, the European Parliament plenary session approved by a large majority an amendment to the European Climate Law, which will also bring about the launch of the ETS2 system in 2028).
However, we want to reopen the space for adjustments to the ETS2 system. That includes efforts for a further postponement, ideally until 2030.
What is going to happen with carbon emission allowances pricing?
Thanks to a non-paper (informal proposal) submitted by the Czech Republic with the support of 18 other countries back in 2024, the European Commission has been persuaded to take steps towards effectively capping the price of ETS2 allowances.
This is another reason why the current postponement is important. Above all, we have bought ourselves time to revise the entire ETS directive, which will start this year. This is what we should now focus on and take a comprehensive look at the functioning of the ETS1 and ETS2 systems. We need a predictable and reasonable price for carbon emission allowances. That apllies to households and smaller businesses. However, we also have to think about maintaining and expanding industrial and defense capacities in Europe.
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CBAM which entered into force on 1 January 2026, is another hot topic. In your opinion, is this the right move to protect European manufacturers from imports from countries where no strict environmenal rules apply?
CBAM (Carbon Border Adjustment Mechanism) may have been well-intentioned originally as a way to help European energy-intensive industry. In practice, however, the EU has unfortunately created a sort of a ’hybrid’ that formally appears to be a climate measure, but in fact is nothing more than a protectionist carbon tariff. Essentially, this would not be a problem; however, the tariff is botched and full of loopholes. Unfortunately, Commission did not respond to calls from industry to postpone CBAM’s launch in January. Now we see chaos, circumventions, and unintended consequences. And now they are trying to improve the whole system while it is already running.
Commission unfortunately did not respond to calls from industry to postpone CBAM and now we see chaos, circumventions, and unintended consequences – MEP Ondřej Krutílek (ECR/CZE)
The first omnibus brought some positive changes, exempting smaller importers and partially simplifying the rules for large companies. But then it turned out that the problem lay elsewhere.
That means something is missing, maybe it is too easy to circumvent CBAM?
CBAM applies to specific commodities, such as raw steel or aluminum, or semi-finished products. It does not apply to final products. So what is going to happen? European manufacturers will see an increase in the price of imported steel, as an example. Competitors from third countries will start sending in large quantities nails, screws, and components that are not subject to carbon tariffs. That to say, ’dirty’ merchandise will still enter the EU market and our own industry will suffer. This is counterproductive.
But that is not all. Logically, CBAM should also be extended to other products such as machinery, cars, etc. However, this would again increase prices for end customers. Finding a way out will not be easy. For now, the Commission’s proposal to extend CBAM to certain intermediate products and goods in order to prevent circumvention is on the table, but it will take time to discuss it. The Commission must also come up with a clear solution on how to protect our exporters, who are burdened with allowances.
Thus, adjustments would probably be appropriate…
Yes, here too we need a thorough reassessment and adjustment of the entire CBAM system. CBAM must be linked to an ETS revision mentioned earlier. Otherwise, the energy-intensive production would lose on two fronts at once. The original idea was that CBAM would become increasingly effective and, at the same time, allocation of free carbon emission allowances for industry would be reduced. But it does not work this way. Because CBAM has a number of loopholes, European companies will gradually lose their allowances, but will not receive the protection that was originally promised. And that is not sustainable.
