The Institute for Climate Economics warns against weakening EU carbon market rules. Economists Benoît Leguet and Jean Pisani-Ferry argue for strengthening the Emissions Trading System through complementary policies. They say maintaining carbon price signals supports industrial competitiveness and accelerates clean technology innovation. The ETS currently covers 40 percent of European Union emissions with prices around €70 per metric ton.
Major changes begin in 2026 including accelerated free allowance phase-out by 2034 and Carbon Border Adjustment Mechanism implementation. The I4CE analysis recommends expanding CBAM coverage to downstream sectors and using auction revenues strategically for industrial decarbonisation projects. France appears well-positioned for this transition due to abundant low-carbon electricity from nuclear generation and biomass resources.
The economists warn against introducing carbon price caps that would undermine investment incentives. They suggest price floors could provide regulatory predictability while preserving emissions reduction motivation. Auction revenues exceeding €30 billion annually could finance Europe's industrial transformation if deployed toward strategic decarbonisation priorities.