Key facts
- A coalition of 45 European investors managing €11.4 trillion urged EU leaders to maintain a strong and predictable Emissions Trading System (ETS).
- Investors argued that weakening the ETS would undermine confidence and not solve structural issues like high electricity prices and grid constraints.
- They proposed complementary industrial policies, such as grid improvements and clean tech financing, to support decarbonization.
- The ETS has been credited with a 50% reduction in emissions from covered sectors since 2005, with a 62% cut targeted by 2030.
- The European Commission has a four-year plan budgeted at roughly €660 billion annually to reduce fossil fuel dependence.
A coalition of 45 major European investors, collectively managing €11.4 trillion in assets, has urged European Union leaders to maintain the strength and predictability of the bloc's carbon market, the Emissions Trading System (ETS). The plea comes ahead of crucial EU Council talks on June 18-19 and a scheduled legislative review of the ETS on July 15.
The investors argue that the ETS is a cornerstone of Europe's clean industrial strategy and that weakening it would undermine investor confidence without solving deeper structural issues like high electricity prices and grid constraints. They advocate for complementary industrial policies, such as grid enhancements, electrification, and clean technology financing, to support industrial decarbonization.
The letter highlights that emissions from sectors covered by the ETS have fallen by approximately 50% since 2005, with a target of a 62% reduction by 2030. While acknowledging the challenges faced by heavy industries in decarbonizing, the investors believe targeted support measures alongside a robust ETS are the appropriate solution.
This stance contrasts with calls from some EU countries and heavy industry lobbyists to dismantle or ease pressure from the ETS. The European Commission has recently proposed a four-year plan, budgeted at around €660 billion annually, to reduce EU dependence on fossil fuels by improving electricity grids, increasing storage, and boosting clean power deployment.
Walter Hatak, head of responsible investments at Erste Asset Management, emphasized that institutional investors rely on predictable business strategies for capital allocation and that supporting a robust EU ETS aligns with their fiduciary interests by mitigating climate, energy security, and transition policy risks.