Italy calls for suspension of carbon price in major attack on EU climate policy

BRUSSELS — Italy is pushing to suspend the European Union’s most important climate policy until it undergoes a “deep revision,” arguing the carbon market has become a burden on European industry.

The move is an extraordinary attack on the EU Emissions Trading System (ETS) and suggests the consensus that has made the bloc among the world’s most climate-friendly jurisdictions is fraying. Other countries have also signaled waning support for the carbon price in recent weeks, but Italy’s position is the biggest assault yet from one of Europe’s biggest economies.

Speaking at the Competitiveness Council in Brussels on Thursday, Minister for Enterprises Adolfo Urso said the ETS, “as currently designed, represents an additional tax on European companies,” raising costs and undermining competitiveness.

Rome, he said, will formally ask the European Commission to pause the system until changes are made to emissions benchmarks and allowance allocation rules, including delaying the phase-out of free allowances.

Urso also called for the introduction of a stable support mechanism for exporting companies, arguing that this element was not fully defined in the recent reform of the Carbon Border Adjustment Mechanism (CBAM). He stressed that the ETS and CBAM must be aligned and geared toward protecting Europe’s industrial base.

“Chemicals, the industry of industries, is under pressure from high energy costs,” he said, warning that the ETS in its current form is “ineffective and harmful” because it erodes margins without providing sufficient safeguards against competitive distortions.

 “We need clear rules and reliable monitoring tools to prevent distortions along value chains. CBAM and ETS must become instruments that support industry, not factors that weaken its competitiveness,” he added.