Negotiators gathered at Dublin Castle as Ireland’s Presidency of the Council of the European Union opened talks on what is being billed as one of the biggest rewrites of Europe’s climate rulebook in nearly 20 years — and the first fault lines are already visible over plans to reshape the EU’s main carbon market.
The European Commission says the overhaul is essential if European industry is to stay competitive without derailing the EU’s legally binding climate goals.
But Sweden and prominent environmental organisations are pushing back, warning that parts of the package could dilute climate action by easing the pace of emissions cuts and favouring companies that have moved more slowly to decarbonise.
At the heart of the debate is the EU Emissions Trading System (ETS), the bloc’s carbon market for power generation, heavy industry, aviation and shipping.
Launched in 2005, the ETS has cut greenhouse gas emissions in covered sectors by about 50% and has brought in more than €270 billion for clean energy projects and industrial innovation.
Sweden was among the first member states to publicly criticise elements of the ETS reforms
The Commission is now seeking to update the ETS as part of a broader push to speed up electrification across Europe and curb reliance on imported fossil fuels.
Among the measures on the table are a slower reduction of emissions allowances during the 2030s, an extension of free carbon allowances for certain industries until 2038, a limited role for international carbon credits late in the decade, and a requirement that member states reinvest half of their ETS revenues into industrial decarbonisation.
Brussels maintains the changes would make the clean transition cheaper while keeping the EU on course for its target of cutting greenhouse gas emissions by 90% by 2040.
European Commissioner for Environment, Water Resilience and a Competitive Circular Economy Jessika Roswall dismissed claims that the proposals amounted to a step back from ambition.
“I don’t agree with that,” she said.
Commissioner Roswell said building competitiveness and safeguarding the environment should be treated as mutually reinforcing.
“Investing in nature, climate adaptation and competitiveness are not a contradiction. They are two sides of one coin.”
She said Europe must dramatically accelerate spending on clean electricity, renewable power and water resilience as worsening wildfires and droughts take hold in countries across the continent.
Commissioner Jessika Roswall argued the reforms would strengthen Europe’s competitiveness
“We need to protect water, secure resilient landscapes and invest in nature because it is about climate adaptation,” she added.
Roswall also defended the Commission’s wider Electrification Action Plan, which aims to almost double electricity’s share of Europe’s energy consumption by 2040 by expanding the use of electric vehicles, heat pumps and renewable electricity.
The Commission estimates the approach could cut Europe’s annual fossil fuel import bill by around €260bn by 2040.
Even so, Sweden quickly emerged as one of the first governments to openly criticise parts of the ETS reform package.
State Secretary for Climate and the Environment Daniel Westlén said the Commission’s approach would blunt the pressure on industry to cut emissions.
“It’s rewarding those who didn’t do their homework.
“Companies that acted accordingly to what we wanted them to do, that trusted us, will be punished if this proposal goes through,” he said.
Sweden argues that emissions from industry and electricity generation should keep dropping sharply, describing those areas as among the most straightforward to decarbonise.
Westlén also objected to prolonging free emissions allowances and raised doubts about allowing international carbon credits later in the 2030s.
“We should stick to the plan and phase them out,” he said of free allowances.
Environmental groups echoed concerns about the trajectory of the reforms.
Minister Darragh O’Brien said Ireland’s role in the Presidency was to build consensus (Collins)
Secretary General of the European Environmental Bureau Patrick ten Brink warned that the recent political emphasis on simplifying EU environmental law risked sliding into deregulation.
“The ambition is not the problem. The implementation is the problem,” he said.
He said the priority should be improving enforcement of existing climate and environmental rules rather than weakening them.
Ten Brink also pressed the EU to ensure none of its next long-term budget ends up supporting fossil fuels, and called for continued investment in renewable energy, electricity grids and environmental programmes.
Ireland, now chairing the talks among the 27 member states, said it intends to act as a neutral broker.
Minister for Climate, Energy and the Environment Darragh O’Brien said the Presidency would focus on building agreement in what he described as one of the most complex climate negotiations expected over the next six months.
“Our target is to get back to the December Council meeting with proposals with regard to ETS and an agreement.
“I think it’s doable,” he added.
O’Brien said ministers broadly accept the ETS remains central to Europe’s decarbonisation plan, even as governments disagree over how the scheme should develop.
He also pointed to the destructive wildfires burning in parts of Europe as a stark reminder of the urgency of the climate challenge.
“There should be no question or no doubt that we are in a crisis.
“We need to reset how we approach this in terms of the urgency,” Mr O’Brien said.
Alongside the ETS, ministers also discussed how Europe is preparing for this autumn’s United Nations climate, biodiversity and desertification summits, where Ireland will lead EU negotiations.
The talks come as Europe faces mounting pressure to square climate ambition with economic competitiveness, energy security and industrial investment.
The way ministers reconcile those competing demands in the months ahead is set to influence EU climate policy well into the next decade.
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Robinson urges EU not to weaken climate ambitions
Former President and Elder, Mary Robinson, has urged EU Environment Ministers to resist short-term political and economic pressures to weaken climate ambitions, to build stronger partnerships with Africa ahead of future UN climate talks, and not to lose sight of long-term climate goals.
Speaking at Dublin Castle, Mrs Robinson said Europe faced a series of immediate crises but warned they should not distract policymakers from the long-term transition away from fossil fuels.
She said ministers were currently grappling with climate and biodiversity crises, energy security concerns linked to the closure of the Strait of Hormuz, and the growing threat posed by a developing ‘Super El Niño’ weather pattern.
Rather than responding to each challenge in isolation, she said Europe should adopt what she described as a “long view management” approach.
That meant continuing to pursue green industrialisation, restoring nature and reducing dependence on fossil fuels while dealing with more immediate pressures.
“It is really important to have a green industrialisation, to get out of fossil fuels, to renew nature and to be aware of the link between climate and nature at all times while coping with short-term crises,” she said.
Mrs Robinson also called on the European Union to begin preparing beyond this year’s UN climate summit and build a long-term partnership with African countries ahead of COP32, which is due to be hosted in Ethiopia next year.
She said Europe should recognise Africa as an equal partner in tackling climate change, pointing out that although the continent is home to 33 of the world’s 54 least developed countries, it receives only around 14% of global climate finance and less than three per cent of private investment.
She said European governments and investors could play a significant role in changing that imbalance.
She also expressed concern about proposals to reform the EU Emissions Trading System (ETS), saying many European business leaders who had already invested heavily in reducing emissions feared they could be disadvantaged if climate policies were weakened.
Mrs Robinson said maintaining hope would be essential in confronting the climate challenge.
Quoting the late Archbishop Desmond Tutu, she encouraged leaders to remain “prisoners of hope” as they navigated the difficult years ahead.
