Price corridor proposal sows confusion. There is no text publicly available, Veyt believes the intention is to target ETS2.
EU ministers met in the Environment Council yesterday to discuss the Clean Industrial Deal (see further down). French minister Agnès Pannier-Runacher took the occasion to question the price volatility in the carbon market and called for an ‘ETS price corridor’ to address the problem. This, alongside a text circulated among the participants and seen by media outs, but not publicly disclosed, triggered a sharp drop in EUA futures prices.
In an article titled “France demands EU restricts CO2 emissions price, document shows” and quoting unnamed sources close to the discussions, Reuters reported from the Environmental Council meeting that the French minister raised the possibility of establishing an ETS price corridor. The reporting on the topic referenced the EUA price (the only unit currently being traded in the EU ETS) rather than the upcoming prices for the EU ETS 2 for buildings and road transport. The article came out at 12:04 CET, after which EUA prices promptly fell by EUR 1.80/t (2.6%).
France announced ahead of the meeting that it wanted to bring up the ETS. Paris argues that the price signal is being ‘distorted’ and calls for a review of the Market Stability Reserve for the upcoming ETS2. The aim is to bring more allowances to the market, thereby lowering the price. The French minister clarified that she does not want to abolish or delay the ETS2.
French news outlet Contexte reported that the mention of a ‘price corridor’ was eventually eliminated from the text shared with the other ministers, but that Mme Panier-Runacher touched on this in her oral intervention. According to sources present during the closed-doors session, she presented the “establishment of an ETS price corridor defined in line with the European Union’s emissions reduction objective” as one possible solution, as this would “improve price predictability” on the carbon market.
She reportedly also called for the “publication of [EUA] price reference trajectories”, to be done by the European Commission.
Other news outlets put out similar stories, but none were able to clearly establish whether the French proposal intends to target the existing ETS1 or the upcoming ETS2 on road transport and buildings, set to come into full operations in 2027 (or both).
Without seeing the French text or detailed minutes from the discussions, it is impossible to know exactly what was being proposed. At the closing of the meeting, the Polish Council presidency said the French proposal had received solid support. The Council summary merely says that “France shared information on mechanisms to stabilise allowance prices in emissions trading schemes”.
The ambiguity of the language around the topic begs clarity from officials, but Veyt believes the mention of the ‘carbon price corridor’ is more likely to apply to the EU ETS 2 to be launched in 2027. We have been in contact with people in the European Commission who have corroborated this view.
In recent weeks, we have witnessed mounting opposition to the impending carbon market for the transport and building sector, reaching the point of the Estonian Prime Minister arguing for its repeal.
The main topic on the agenda yesterday was the Clean Industrial Deal, on which the European Commission presented a 24-page roadmap on 2026 February. The CID strategy will almost certainly be intertwined with the 2040 emission target, for which the Commission has so far failed to present a draft legislative proposal (it did put forth a ‘communication’ recommending a 90% reduction target, in February 2024).
Ten member states supported Luxembourg’s call for the Commission to quickly present a legislative proposal for the 2040 target to be inscribed into the Climate Law. Several highlighted the risk of being unable to submit an updated climate pledge (known as a Nationally Determined Contribution, or NDC) for Europe in time for the November COP30 climate summit in Brazil.
Czechia, Slovakia and Hungary, on the other hand, criticised the 90% target recommended by the Commission in its 2024 communication.
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Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
