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A coalition of 45 major European investors managing €11.4 trillion in assets has warned European Union leaders that if Europe wants private capital to finance industrial decarbonisation, the bloc’s carbon market, the Emissions Trading System (ETS), must remain strong, predictable and central to economic strategy.
The investors made their plea in a letter ahead of EU Council talks on 18 and 19 of June, where leaders will discuss the future of the ETS. A legislative review of the carbon market system is scheduled for 15 July.
The European Commission recently laid out a four-year plan to cut the EU’s dependence on fossil fuels by revamping electricity grids, increasing storage capacity and boosting clean power deployment. The effort is budgeted to cost roughly €660 billion annually, rising to €695 billion between 2031 and 2040.
With Italy, Germany and other EU countries, backed by intense lobbying from heavy industry, have been calling for the ETS to be dismantled, the investors argue that it has become the cornerstone of Europe’s clean industrial strategy.
Among the signatories of the letter sent to EU leaders are Allianz SE, L&G Asset Management, the Church of England Pension Board, Erste Asset Management, Sampension and Nordea Asset Management. The statement is also endorsed by the Net-Zero Asset Owner Alliance.
“Since 2005, emissions from electricity generation and industry covered by the ETS have fallen by about 50%, and the system is on track for a 62% cut by 2030. Most of the reductions so far have come from the power sector, where coal use has declined while wind and solar generation continue to grow,” reads the letter.
The investors argue that while heavy industries face greater decarbonisation burdens due to long asset lifetimes, high capital requirements and technological constraints, the solution is targeted support measures alongside the ETS, rather than weakening the carbon market itself.
Enabling conditions
The letter also rejects suggestions that Europe’s industrial competitiveness problems can be solved by softening carbon pricing. Instead, the investors argue that the continent’s real challenges stem from structural issues such as high electricity prices, grid constraints, and limited access to affordable clean energy.
Weakening the ETS, the signatories say, would undermine investor confidence while doing little to solve these deeper problems. They argue that the ETS is not a regulatory burden but an economic signal that guides trillions of euros in investment decisions.
Walter Hatak, head of responsible investments at the Austrian Erste Asset Management, warned that institutional investors depend on predictable and durable business strategies to allocate capital with confidence.
“Supporting a robust EU ETS is therefore aligned with our fiduciary interests, helping protect diversified portfolios from systemic climate, energy-security and transition-policy risks while improving visibility for real-economy investment,” Hatak said.
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