European power sector calls for stable EU carbon price and long term ETS reform ahead of post‑2030 review

The European power sector association called on Thursday for the EU to avoid ad hoc interventions in its Emissions Trading System as it prepares for the post-2030 review period. The sector's position paper urges the European Commission to strengthen price stability tools within the ETS and to ensure that carbon market revenues are directed into industrial decarbonisation programmes. The intervention comes as the power sector, which is one of the largest participants in the EU carbon market, seeks regulatory predictability to support investment decisions in clean energy infrastructure over the coming decade.

Price volatility in the EU ETS has been a persistent concern for companies that need to make long horizon capital allocation decisions. When carbon prices swing unpredictably, the financial case for investing in low carbon technologies becomes harder to model and defend to boards and investors. The power sector's call for strengthened price stability tools reflects a wider industry view that the Market Stability Reserve, the existing mechanism designed to manage ETS supply, has not been sufficient to prevent sharp price movements that complicate decarbonisation planning.

For ESG managers and CFOs at energy intensive companies covered by the EU ETS, the post-2030 review is a critical regulatory moment. The rules governing free allocation, the linear reduction factor for the emissions cap, and the treatment of innovation fund revenues will all shape the cost of carbon compliance through the 2030s. Companies that are currently building transition plans and science based targets aligned with 2030 and 2035 milestones need a clear view of what the ETS framework will look like after the current trading phase ends. The power sector's submission is one of the earliest formal contributions to what will become an extended policy debate.

The call to direct ETS revenues into industrial decarbonisation is particularly relevant for procurement leads at energy intensive manufacturers. If the Commission follows this direction, it could unlock additional funding streams for industrial electrification, green hydrogen infrastructure, and carbon capture projects, all of which have direct implications for supply chain decarbonisation strategies and Scope 1 emissions reduction roadmaps. The alignment between carbon market revenue recycling and industrial policy is becoming a central question in the EU's broader competitiveness agenda.

The European Commission is expected to begin formal work on the post-2030 ETS architecture in the coming months, with stakeholder consultations likely to open before the end of 2026. The power sector's early positioning sets a benchmark against which other industrial groups, environmental organisations, and member state governments will respond. ESG professionals tracking EU carbon market policy should monitor the Commission's forthcoming consultation documents closely, as the decisions made in this review cycle will define the carbon pricing environment for the 2030s and beyond.