• EU must avoid ‘backpedaling on key legislation’ and its move to postpone ETS2 is ‘dangerous if it does not come with safeguards,’ says Phuc-Vinh Nguyen, head of Jacques Delors Energy Center

• ‘EU is not on track to reach climate neutrality by 2050 ... This way, the 2050 target will remain a political aspiration rather than a realistic trajectory,’ says senior policy fellow Philipp Jager

BRUSSELS

European leaders at COP30 are facing renewed doubts about their climate resolve, after EU governments agreed to delay the launch of the bloc’s new carbon market for buildings and road transport – known as ETS2 – by a year to 2028.

The move, made over fears of rising household costs, has drawn sharp criticism from climate experts who warn it risks undermining Europe’s long-term decarbonization goals.

The decision came just weeks before the UN climate summit in Belem, Brazil, and days after the European Commission softened its proposed 2040 emissions-reduction target.

Together, the two shifts signal what analysts describe as “climate fatigue” within the bloc, as governments weigh green policies against the growing cost of living.

“Concerns are justified, especially in countries that do not have a carbon price and where the average income is lower than the EU,” said Phuc-Vinh Nguyen, head of the Jacques Delors Energy Center in Paris.

“Ultimately, it will come down to how effective can the redistribution of the carbon revenue be … Estimates talk about a raise of around 10% on gas and 10 cents per liter on oil, which will not be felt the same way depending on where you are living in the EU.”

The ETS2 mechanism, part of the EU’s wider Emissions Trading System, was designed to extend carbon pricing to fuels used in buildings, road transport, and small industries. It would place a uniform price on carbon for distributors of petrol, gas, and heating oil – costs expected to be passed on to consumers.

Originally slated to launch in 2027, the plan was resisted by several Central and Eastern European nations that argued a single EU-wide CO2 price would raise petrol, gas and heating oil costs sharply, disproportionately affecting low-income households.

At the same time, EU leaders agreed to allow up to 5% of the bloc’s 2040 emissions reduction target to be met through international carbon credits – a controversial offset mechanism environmental groups say could weaken Europe’s real emission cuts by outsourcing responsibility to other regions.

‘Carbon pricing remains the backbone’

Experts say the political compromise could erode the most effective pillar of the EU’s climate framework. “Carbon pricing remains the backbone of EU climate policy. If that backbone is weakened too far, the entire framework risks collapse,” warned Philipp Jager, senior policy fellow for European climate and economic policy at the Jacques Delors Center.

“The EU, therefore, needs a high and predictable carbon price – not a politically managed one that fluctuates with electoral cycles,” he said.

Jager added that social protection must complement pricing reform.

“These households must be protected and supported in transitioning to cleaner alternatives. While the Social Climate Fund is a key EU tool towards this objective, its volume – roughly €65 billion (over $75 billion) – is ultimately not large enough to ensure a just transition.”

The Social Climate Fund, created in 2023 to ease the impact of carbon pricing on vulnerable families, will channel revenues from the ETS2 back to member states. Yet experts warn the fund’s limited size and slow rollout could trigger political backlash, especially if energy prices spike again.

EU off track for 2050

Under the latest compromise, EU states endorsed a 90% reduction in emissions by 2040 compared to 1990 levels, but inserted several “flexibilities” that dilute the original target.

Alongside international offsets, member states approved the inclusion of permanent carbon removals and sectoral flexibilities – steps intended to ease compliance but which analysts say blur accountability.

Nguyen warned that delaying ETS2 could weaken the policy’s credibility. “Softening carbon pricing policies means less inflationary pressure but diminishes the ability to reach the target, putting more pressure on regulatory measures,” he said.

“The recent agreement regarding postponing ETS2 is dangerous if it does not come with safeguards, as the side effects related to the postponement are still to be evaluated.”

Europe’s credibility gap is widening, experts caution, as it drifts further from its legally binding goal of reaching climate neutrality by 2050.

“Too soon to tell, as the political momentum can shift quite rapidly, as we’ve recently witnessed,” Nguyen noted, adding that the EU must avoid “backpedaling on key legislation” and strengthen industrial support for clean technologies.

Jager was more direct with his assessment, stating that the EU “is not on track to reach climate neutrality by 2050.”

“Climate policies are being watered down across the board. Decarbonizing industry, transport, and heating needs a mix of sticks and carrots, i.e., subsidies and carbon prices. At present, neither is being applied with sufficient force. This way, the 2050 target will remain a political aspiration rather than a realistic trajectory.”

The political deal among member states now heads to negotiations with the European Parliament, which must decide whether to endorse the revised 2040 target and delayed ETS2 timeline, or push for a stronger climate package.