A coalition of civil society organisations, cleantech innovators, investors, industry associations, and researchers, will send a joint letter next Wednesday 12^th November to Executive Vice-President Teresa Ribera, Commissioner Wopke Hoekstra, and senior officials in DG CLIMA and DG COMP, warning that proposed reforms to the EU’s ETS State Aid Guidelines could undermine Europe’s climate ambitions by diverting billions in carbon revenues away from decarbonisation. 

Under the European Commission’s proposed revision, the number of sectors eligible for ICC would more than double, including industries with little exposure to carbon costs. The signatories argue that this expansion risks turning a targeted support tool into a broad subsidy mechanism, counter to the EU’s stated climate priorities and simplification agenda. Furthermore, the signatories also warn that retaining fossil-based CO₂ emission factors in the calculation of compensation ignores the growing share of renewables and low-carbon power in EU electricity markets. 

With €4 billion spent on ICC in 2023 -diverting over 16% of ETS revenues away from climate action- the proposed reform risks channeling even more funds into compensation rather than tackling the root causes of the energy transition challenge. 

Key asks:  

• Refrain from the expansion of eligible sectors under the Guidelines, at least until the current system of ICC has been adequately reformed. 

• Update CO₂ emission factors to reflect the average annual marginal emission intensity of the price-setting generation units in the bidding zone, based on real market data rather than the average of all fossil power plants. 

Quotes  

«At a time when every euro of carbon revenue should accelerate decarbonisation, expanding ICC would do the opposite by pouring public money into maintaining the status quo instead of funding the clean transition.»

«The EU’s carbon market was designed to make polluters pay, not to pay polluters. This reform risks undermining trust in the ETS as the cornerstone of Europe’s climate policy.»