At the heart of their ideological dispute is the Emissions Trading System (ETS), which puts a price on carbon emissions from polluting industries.
One camp, which includes Austria, Bulgaria, Croatia, the Czech Republic, Greece, Greece, Hungary, Italy, Poland, Romania and Slovakia, argues that the ETS is a burden on the economy that unfairly taxes companies and prevents them from lowering their electricity bills.
The other camp, which includes Belgium, Denmark, Finland, Luxembourg, Portugal, Slovenia, Spain, Sweden and the Netherlands, argues that the ETS is a necessary tool to limit CO2 emissions and incentivize heavy industry to switch to greener energy sources.
While the wind was blowing in favor of opponents in February, it has now shifted in favor of advocates. In a five-page letter to leaders ahead of the summit, Ursula von der Leyen fully supported the long-standing mechanism, while promising to address excessive volatility in the carbon market, euronews writes.
“The ETS is market-based, technology-neutral and provides long-term investment certainty while encouraging first movers to enter the market. Based on the ETS system, companies across Europe have made investment decisions for the coming decades,” she wrote.
“Now we must ensure it is adapted to new realities.”
As an immediate solution to offset high energy bills, Brussels is recommending that governments either cut taxes or increase subsidies, both of which affect revenues.
But the long-term prescription is much less clear, as country leaders remain rigidly divided on the need for structural reforms. Electricity prices vary widely across EU member states, making it even more difficult to find a common language.
