European Commission President Ursula von der Leyen advocates for greater reinvestment of emissions trading system revenues by EU member states to accelerate industrial decarbonisation ahead of upcoming reforms.
European Commission President Ursula von der Leyen used an industry forum on Wednesday to defend the EU’s carbon market while pressing member states to direct far more of the system’s proceeds into hard-to-abate industrial decarbonisation.
Von der Leyen argued the emissions trading system has been instrumental in driving emissions down across covered sectors since its inception in 2005, and highlighted the contrast between EU-level and national reinvestment of revenues. According to ESG Today, she said that while revenues are fully recycled into industrial innovation at the European level, less than 5% of ETS receipts are being channelled back into industrial decarbonisation by member states. She urged governments to “step up and match our level of support.”
Her intervention comes as Brussels prepares further ETS reform later this year. The Commission has already reworked the system in recent years: the 2023 revision tightened the cap with an aim of cutting emissions from sectors covered by the ETS by 62% by 2030 versus 2005, and established a separate new trading system, ETS2, to bring buildings, road transport and additional sources into a carbon-pricing framework. Industry briefings and official Commission material indicate the new scheme was intended to become operational in 2027 but implementation is now expected to slip to 2028 as negotiators align the timetable with a revised 2040 EU climate ambition.
The policy case von der Leyen set out is supported by recent EU data showing substantial progress. The European Commission’s climate service reported that emissions from installations and aircraft operators covered by the ETS fell by a further 5% in 2024 compared with 2023, leaving total ETS emissions around 50% below 2005 levels and on track for the 2030 target. Reform-support documentation estimates cumulative reductions of roughly 47% by 2023, underscoring the rapid pace of decarbonisation in the power sector in particular.
Yet the Commission’s message must contend with strong resistance from emissions-intensive industries and some national governments. Business groups warn that high and volatile carbon prices, combined with incomplete national recycling of revenues, risk undermining competitiveness and could accelerate carbon leakage , the relocation of production to jurisdictions with weaker climate constraints. Industry representatives have also lobbied for measures that shield exposed sectors while preserving incentives for deep emissions cuts.
Policy analysts and international institutions have flagged structural questions around ETS2 and its interaction with existing instruments. The OECD has noted the new ETS aims to cut emissions from road transport, buildings and industrial heating by roughly 42% by 2030 relative to 2005, and that the carbon price in ETS2 is expected initially to be lower than under the original EU ETS, with a possible review of a merger between the two systems in 2031. The Commission’s own implementation guidance envisages upstream coverage for fuels and strengthened funding channels such as the Innovation and Modernisation Funds to support technological deployment.
Von der Leyen framed greater national recycling of ETS revenues as central to addressing industry anxieties and accelerating deployment of decarbonisation technologies. Industry-focused climate finance is a scarce commodity: while EU-level instruments have been scaled up, member-state allocations for industrial transition remain modest in many capitals. Reorienting a larger share of auction revenues towards demonstrator projects, industrial electrification, low-emissions process heat and carbon capture and storage would, the Commission argues, reduce cost pressures on firms and make the transition more politically and economically manageable.
For policymakers and corporate sustainability leads, the immediate practical question is how national budgets and industrial policy will change in response. Upcoming ETS negotiations are likely to squarely address conditionality and transparency around national use of ETS funds, along with safeguards for sectors at risk of relocation. The shape of ETS2 financing, the timeline for its roll-out, and the balance between direct support and market incentives will determine whether European heavy industry can accelerate decarbonisation while preserving competitiveness.
As Brussels pushes for higher national reinvestment rates, the debate will pivot on trade-offs between cost containment, industrial resilience and the speed of technology adoption. The Commission’s statistics on emissions reductions provide ammunition for proponents of carbon pricing; the challenge now is converting those macro gains into targeted finance at national level that unlocks deployment of the industrial-scale technologies , electrification, hydrogen, materials substitution and carbon capture , required to decarbonise Europe’s most emissions-intensive sectors.
- https://www.esgtoday.com/von-der-leyen-urges-eu-states-step-up-reinvestment-of-carbon-pricing-revenues-into-industrial-decarbonization/ – Please view link – unable to able to access data
- https://www.esgtoday.com/von-der-leyen-urges-eu-states-step-up-reinvestment-of-carbon-pricing-revenues-into-industrial-decarbonization/ – European Commission President Ursula von der Leyen defended the EU’s carbon pricing mechanism at an industry conference, highlighting its progress in decarbonising industry. She urged member states to significantly increase the reinvestment of revenues from the system into industrial innovation to address concerns from emissions-intensive sectors over the programme’s impact. Von der Leyen noted that while 100% of revenues generated from the EU’s Emissions Trading System (ETS) are reinvested in industrial innovation at the European level, less than 5% is reinvested in industrial decarbonisation at the national level. She stated that this will be a focus area of upcoming reform of the ETS planned for later this year. Established in 2005, the ETS puts a price on carbon emissions for key greenhouse gas (GHG) intensive sectors, including electricity and heat generation, oil refineries, steel, cement, paper, chemicals, and commercial aviation, among others. In 2023, the EU adopted an “ETS2” plan to expand the ETS, including extending the carbon pricing system to new sectors, including fuel used for road transport and for heating buildings. Initially planned for 2027, ETS2 is expected to be delayed until 2028, as part of an agreement between the EU Parliament and member states on a new 2040 European climate target. The EU Commission’s President’s comments come amidst growing criticism from industry and some member states about the impact of the ETS on industrial competitiveness, citing concerns ranging from the high cost and unpredictability of carbon pricing, and carbon leakage, a situation in which companies move production of emissions-intensive goods to countries with less stringent environmental and climate policies. In her defence of the ETS, von der Leyen cited the success of the carbon pricing system in achieving the EU’s climate goals, noting that emissions have dropped by 39% since the establishment of the ETS, alongside 71% economic growth in sectors covered by the ETS, stating that “this shows that decarbonisation and competitiveness can go hand in hand.” Noting the major gap between the rechanneling of ETS funds back into industries between the EU and member states, von der Leyen called on EU countries to “step up and match our level of support.”
- https://climate.ec.europa.eu/news-other-reads/news/eu-emissions-trading-system-has-reduced-emissions-sectors-covered-50-2005-2025-04-04_en – In 2024, emissions under the EU Emissions Trading System (EU ETS) were further reduced. The power sector was again the most important driver of the decarbonisation progress. The data reported by EU Member States by the deadline of 31 March 2025 show a 5% reduction in emissions in 2024, compared to 2023 levels from the reporting stationary installations and aircraft operators. With this development, ETS emissions are now around 50% below 2005 levels and on track to achieve the 2030 target of -62%. The observed trend confirms the effectiveness and efficiency of the EU’s cap and trade system as an important policy instrument for the decarbonisation of the European economy. Electricity generation – significant increase in the use of renewables The most important driver for the decrease in EU ETS emissions has been the power sector, with emissions from electricity production having been reduced by 12% below 2023 levels.
- https://www.oecd.org/en/publications/oecd-economic-surveys-european-union-and-euro-area-2023_7ebe8cc3-en/full-report/component-7.html – The OECD Economic Surveys: European Union and Euro Area 2023 report discusses the creation of a separate new emission trading system for fuel combustion in buildings, road transport, and industry (ETS 2). The objective is to reduce emissions in road transportation, buildings, and industrial heating processes by 42% in 2030 (compared to 2005 levels). The carbon price is expected to be lower in the new ETS than in the traditional ETS. A potential merger of the new ETS with the traditional ETS will be reviewed in 2031. The report also mentions more ambitious emission reduction targets for non-ETS sectors, with the EU-level emission reduction target for 2030 for these sectors increased from 29% to 40% (compared to 2005 levels), with updates for national targets.
- https://reform-support.ec.europa.eu/what-we-do/green-transition/support-revised-eu-emissions-trading-system_en – By 2023, the EU ETS has helped bring down emissions from European power and industry plants by approximately 47%, compared to 2005 levels. Some of the key changes agreed in the 2023 revision of the ETS Directive include: The cap has been tightened to bring emissions down by 62% by 2030, compared to 2005 levels. This covers emissions from maritime transport, which have been included in the EU ETS (ETS1) from 2024. More resources have been mobilised to support people and businesses in the green transition. Member States have committed to using all EU ETS revenues (or financial equivalent) towards climate action and a just, green transition. The Innovation Fund and Modernisation Fund budgets have been increased accordingly. A new emissions trading system, called ETS2, has been created to cover emissions from buildings, road transport and additional sectors. The new system will become operational in 2027 and complement other European Green Deal policies in these sectors.
- https://en.wikipedia.org/wiki/European_Union_Emissions_Trading_System – The European Union Emissions Trading System (EU ETS) is a carbon market based on a system of cap-and-trade of emissions allowances for energy-intensive industries, the power generation sector, and the aviation sector. As part of the 2023 revisions of the ETS Directive, a new emissions trading system named ETS2 was created. It will address the CO₂ emissions in buildings, road transport, and more sectors not covered by the existing ETS. So far, emission reductions in those sectors have been insufficient to achieve climate neutrality by 2050. It will cover emissions upstream – fuel suppliers, rather than end consumers will need to report, pay for, and reduce emissions. The cap is planned to be set on a level sufficient for reducing emissions by 42% by 2030 compared to 2005 levels. The revenues will be used for climate action and social measures, including through the Social Climate Fund, whose main purpose is to support vulnerable groups. The European Commission has published a study showing how to decarbonise sectors covered by ETS2, in a just way. ETS2 has been designed to start in a smooth manner. Monitoring and reporting of emissions will begin in 2025 and in 2027 the system will become operational.
- https://www.consilium.europa.eu/en/press/press-releases/2023/04/25/fit-for-55-council-adopts-key-pieces-of-legislation-delivering-on-2030-climate-targets/pdf – The Council of the EU adopted five laws that will enable the EU to cut greenhouse gas emissions within the main sectors of the economy, while making sure that the most vulnerable citizens and micro-enterprises, as well as the sectors exposed to carbon leakage, are effectively supported in the climate transition. The laws are part of the ‘Fit for 55’ package, which sets the EU’s policies in line with its commitment to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050. EU emissions trading system The EU Emissions Trading System (EU ETS) is a carbon market based on a system of cap-and-trade of emissions allowances for energy-intensive industries, the power generation sector, and the aviation sector. The new rules increase the overall ambition of emissions reductions by 2030 in the sectors covered by the EU ETS to 62% compared to 2005 levels. By 1 January 2028, building on the results of that framework, the Commission will propose, where appropriate, mitigation measures for non-CO₂ aviation effects.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on February 12, 2026, and reports on recent statements by Ursula von der Leyen at an industry conference. The content appears to be original and not recycled from other sources. However, similar discussions about the EU’s Emissions Trading System (ETS) and its impact on industrial decarbonization have been ongoing, with previous reports dating back to 2024. For instance, in October 2024, industry groups urged the European Commission to focus on industrial carbon management. ([eula.eu](https://eula.eu/wp-content/uploads/2024/10/Industry-urges-the-European-Commission-to-focus-on-Industrial-Carbon-Management.pdf?utm_source=openai)) This suggests that while the specific statements are recent, the broader topic has been under discussion for some time.
Quotes check
Score:
7
Notes:
The article includes direct quotes from Ursula von der Leyen, such as: “Channelling more ETS revenues back to industry will therefore be a core focus of the upcoming reform of the Emissions Trading System this summer.” A search for this exact quote yields no earlier matches, indicating it is likely original. However, without access to the original speech or official transcript, the accuracy of the quotes cannot be fully verified. The absence of earlier appearances of these quotes online suggests they are recent and specific to this event.
Source reliability
Score:
6
Notes:
The article is published by ESG Today, a niche publication focusing on ESG (Environmental, Social, and Governance) topics. While it provides detailed coverage of ESG-related news, its reach and recognition outside the ESG community are limited. The article cites statements from Ursula von der Leyen, which are consistent with her known positions on the EU’s carbon pricing mechanisms. However, the lack of corroboration from major news outlets raises questions about the source’s independence and the potential for bias.
Plausibility check
Score:
8
Notes:
The claims made in the article align with known EU policies and recent discussions about the ETS and industrial decarbonization. The assertion that less than 5% of ETS revenues are reinvested into industrial decarbonization at the national level is plausible, given previous reports on the allocation of these funds. For example, in 2023, €30.9 billion of ETS revenues were allocated to climate action and energy transformation, with €22.2 billion spent on various projects, including energy supply and public transport. ([en.wikipedia.org](https://en.wikipedia.org/wiki/European_Union_Emissions_Trading_System?utm_source=openai)) However, the specific figure of less than 5% reinvested at the national level is not independently verified in the provided sources.
Overall assessment
Verdict (FAIL, OPEN, PASS): OPEN
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents recent statements by Ursula von der Leyen regarding the EU’s carbon pricing system and its impact on industrial decarbonization. While the content appears original and the claims are plausible, the reliance on a niche publication with limited reach and the absence of corroboration from major news outlets raise concerns about the source’s reliability and independence. Additionally, the specific figure of less than 5% reinvested at the national level is not independently verified in the provided sources. Further verification from independent and reputable sources is recommended before publishing. Given these concerns, the indemnity status is “NOT COVERED.”
