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Home » Air Cargo » EU Pledges Stronger Cost-Curbing Measures for New CO2 Market

EU Pledges Stronger Cost-Curbing Measures for New CO2 Market

AN ELEGANT OLDER WOMAN IN A BROWN JACKET SPEAKS FROM A PODIUM IN FRONT OF BLUE AND GOLD EU FLAGS

Ursula von der Leyen Photographer: Simon Wohlfahrt/Bloomberg

October 21, 2025
Bloomberg

The European Union will propose stronger measures to curb emissions costs in a new and controversial carbon market to help address concerns that consumers will struggle to afford to heat homes and fill up cars.

An emissions-trading scheme to cover buildings and road transport is due to kick in in 2027, but has been criticized by many member states over concerns that prices will rise sharply once it’s introduced. EU climate chief Wopke Hoekstra will announce the measures limiting those increases at a meeting of climate ministers on October 21, Commission President Ursula von der Leyen said in a letter to leaders.

“What we need is a transition that is just and fair, whereby especially vulnerable households, small companies and regions that are most exposed to structural changes are protected and supported,” von der Leyen said.

The announcement comes ahead of what’s expected to be a tense meeting between leaders in Brussels this week, where they’ll debate a proposal to cut emissions by 90% by 2040. The EU is under pressure to make sure that it provides enough support to member states to embark on the transition.

The letter outlined the work the commission was doing across a number of sectors, highlighting in particular an upcoming review of the bloc’s effective ban on combustion engines in new cars after 2035. Von der Leyen said that the role of advanced biofuels was being assessed in addition to so-called e-fuels, which are made using renewable energy and captured CO2.

She also highlighted how the commission is boosting funding and cutting red tape to help industry.

Von der Leyen said that the EU’s existing emissions trading system, which puts a price on emissions from manufacturers, airlines and shipping, would also see changes after 2030, by allowing the use of industrial carbon removals. 

She acknowledged that Europe’s natural sinks may not be absorbing as much CO2 as expected, and that it shouldn’t mean that the bloc’s industries face stiffer emissions cuts in order to compensate.

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While von der Leyen has committed to staying the course on climate, she’s running up against more skepticism than five years ago, when Europe pledged to be the world’s first climate neutral continent by 2050. Countries have called for more support for their industries and citizens in the face of high energy prices and stiff global competition.

A group of central and eastern European countries, for example, have urged the commission to delay implementation of the so-called ETS2. France has demanded more protection for its industries in the form of steel safeguards, and a strengthening of the bloc’s carbon border levy.

The commission will enhance the role of a reserve pot of permits under ETS2, known as the Market Stability Reserve, von der Leyen said. The bloc’s executive branch is also exploring the possibility of front-loading auctions of permits, which could also curb price rises. The European Investment Bank would play a role, she added.

BloombergNEF estimates that the price to emit carbon dioxide under the new system may reach €149 ($174) a ton in 2029. That’s more than 80% higher than the current EU price for emissions from power plants and industry.

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