EU leaders are calling on the European Commission to revise electricity prices for households and industrial sites and to urgently present concrete proposals to bring down power costs in the short term, according to an internal document seen by Euronews.
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The move reflects growing political pressure across the bloc to tackle persistently high electricity prices, with oil prices surpassing $114 (around €98) per barrel for the first time since 2022 on Monday amid heightened tensions over the Iran war, which has put both production and shipping in the Middle East under extreme threat.
Even before the United States and Israel launched their strikes against Iran, EU governments feared that high energy and carbon prices could undermine industrial competitiveness and have been lobbying the EU executive to take “urgent and bold action”.
EU leaders have also asked the Commission to deliver a review of the EU’s carbon market, the Emissions Trading System (ETS), by July 2026, according to the document, dated 9 March, which will be discussed at a gathering of EU leaders on 19 and 20 March.
The ETS is the bloc’s mechanism for making companies pay for their pollution, with the dual aim of reducing emissions and encouraging industry to invest in more sustainable alternatives.
‘Checkmate’ on EU’s carbon market
While several EU countries have called on the EU executive not to change the current system, after fierce pressure from industry and some EU countries, the Council wants the EU executive to review the bloc’s carbon market to reduce volatility in the carbon price and limit its impact on electricity bills.
Still, the EU institution representing heads of state says that it’s key to maintain the ETS’s central role in driving investment and innovation in the energy transition.
However, it’s still unclear what kind of measures the EU will take, but ETS reforms should avoid weakening the declining emissions cap if it wants to maintain its climate relevance.
“The carbon price is anchored to the end-of-year surrendering of credits. If something happens today, even if the market believes it is short-term, the effect will be priced at the end of the year,” Alessandro Armenia, energy analyst at the real-time trade intelligence Kpler, told Euronews.
“The best way to remove politics and regulatory impacts is to change the system, from a cap and trade to one that incentivises (pays) those who are willing to decarbonise,” Armenia added.
“Right now, the EU is acting as the policeman, imposing fines on those who do not reduce emissions. Instead, it would be wiser to pay those who want to decarbonise.”
The Council, which represents EU governments, is also pushing for faster development of energy infrastructure, especially grid infrastructure, which is fundamentally important for the massive surge in renewables produced within the EU27 to flow freely without curtailment or congestion.
Expanding electricity infrastructure
EU lawmakers are being urged to reach a deal in 2026 to expand electricity grids and strengthen cross-border interconnections, including by speeding up permitting procedures, according to the document.
The latest spikes in imported fossil fuel prices have reinforced the argument made by some EU policymakers that accelerating the energy transition remains the most effective path to long-term energy security and economic resilience. The notion is that by expanding renewable and low-carbon energy sources, the EU can reduce its dependence on volatile global fuel markets while delivering cheaper, domestically produced power.
However, EU leaders acknowledge that the transition must be managed carefully in the short term to avoid the risk of losing energy-intensive industries to regions with lower energy and carbon costs.
“As long as Europe depends on imported fossil fuels, we will remain exposed to global volatility. That is why strengthening our energy independence is essential to delivering a cleaner, more secure and more affordable energy system,” Energy Commissioner Dan Jørgensen said on Tuesday following the Commission’s presentation of mini-nuclear plants to be deployed across the bloc by 2030.
EU governments and the Commission have also been called on to accelerate the expansion of electrification across the bloc while keeping costs under control, a measure that will greatly benefit from improved grid infrastructure.
EU leaders are also considering reviewing taxes, electricity network charges and carbon costs tied to energy prices as a quick fix for struggling industries, according to a second document seen by Euronews and discussed by EU leaders on 6 March.
