A group of institutional investors managing over 10 trillion euros in assets has warned the European Commission not to weaken the EU Emissions Trading System (ETS). In an open letter, they argue the carbon market needs stronger price signals and tighter caps to drive industrial decarbonization, not exemptions or free allocations that blunt its effect. The investors specifically push back against proposals to shield certain industries from carbon costs or to slow the phase-out of free allowances. They say a robust ETS is the most cost-effective tool Europe has to meet its 2040 and 2050 climate targets. The letter calls for expanding the market to cover more sectors and linking it with other carbon pricing systems globally. For carbon market watchers, this is a signal that big capital sees a strong carbon price as essential for investment certainty. The real test will be whether EU policymakers listen or cave to industrial lobbying for carve-outs.
