17. 07. 2026
AUTHOR: Strategic Perspectives
Today, the European Commission published its reform of the EU Emissions Trading System (ETS) and Electrification Action Plan. Together, the files set a credible course for reducing the EU’s dependence on imported fossil fuels and boosting electrification, even as the ETS reform weakens some of the system’s parameters.
On the EU ETS,
Executive Director Linda Kalcher commented: “The ETS proposal is a Trojan horse: It looks like a gift for companies to delay their emission reductions while in reality this puts them at a competitive disadvantage with Chinese companies that accelerate. One more time, political pressure trumps economic and market realities. After slowing the transition to e-mobility, also industry and the power sector have a weaker trajectory now despite being the sectors where it’s cheapest to decarbonise. As a result, reaching the 2040 target might become unnecessarily expensive and the much-needed investments in innovation are at risk.”
Industry Analyst Tristan Beucler added: “The EU’s industry is suffering from two main threats: high and volatile energy prices due to fossil fuel dependence, and unfair competition from China. That is why a policy based on a predictable and impactful carbon price, the Emissions Trading System, and support for domestic demand for Made-in-Europe products in strategic sectors, the Industrial Accelerator Act, can play a crucial role for the EU’s competitiveness. One rewards decarbonisation, the other rewards investment into local value chains.”
Institutional Relations Analyst Andrés Pelayo Alfonso concluded: “The Commission’s ETS reform proposal already sets a low bar, before it lands in the Parliament where some are prepared to push it even lower. The Council is far from unanimous: one bloc is calling for more flexibility, and another for further progress. That same fault line is likely to run through the political groups in the European Parliament. The future of Europe’s industrial policy is now on the table. What this reform needs is predictable carbon prices, without penalising those who have already invested to decarbonise their processes.”
On the Electrification Action Plan,
Director Neil Makaroff analysed: “While the EU cannot control geopolitics or global gas and oil markets, it can reduce its exposure to them, and today’s Electrification Action Plan is a critical first step in that direction. Setting a target of electrifying 46% of the economy by 2040 is not only feasible, but brings major security dividends by putting the EU on course to cut gas demand by two-thirds and oil demand by half. The next step will be to move this plan beyond aspirational goals and translate it into a binding target. It is key so investors, companies, and citizens all get the same message: Europe chooses electricity over gas and oil imports for the next decades, and no return is possible.”
Energy Analyst Marin Gillot added: “For the first time, the Commission recognises that the electricity-to-fossil fuel price ratio is not just an outcome of energy markets, but a policy choice. By proposing reforms to electricity taxation, network charges and fossil fuel subsidies, it acknowledges that the relative price of electricity determines whether households install heat pumps, industries electrify production and drivers switch to electric vehicles. Europe will only reduce its dependence on imported fossil fuels when electricity is consistently the economically attractive choice.”
Media contact: Mirta Baselovic
