EU strengthens price controls on new ETS2 carbon market to prevent fuel bill spikes

The European Union has agreed to reinforce price controls in its upcoming ETS2 carbon market, which will cover heating and transport fuels. The new measures include accelerating the release of additional allowances when carbon prices exceed 45 euros per tonne, extending that price cap beyond 2029, and shortening the trigger time for allowance releases from two months to one. These changes aim to address government concerns that the emissions-cutting scheme could drive up household fuel bills. The ETS2 is designed to extend carbon pricing to sectors not covered by the existing EU Emissions Trading System, but member states worried about political backlash from rising energy costs. By tightening the market stability reserve, the EU hopes to prevent sudden price spikes while still maintaining a price signal for decarbonization. The European Parliament announced the agreement in a statement early Thursday, with the measures set to take effect when the new market launches.