The European carbon market fell on Thursday afternoon after Bloomberg reported that the European Commission is considering relaxing regulations. The Dec-26 EUA contract briefly dropped to €67.82, its lowest intraday level since late April, before closing at €68.73, marking a sharp daily loss of 4.36%.

According to Bloomberg, citing people familiar with the matter, the EU executive is planning to “relax carbon-permit supply rules and allow more state aid as part of an emergency plan to cut spiking power prices.” The Commission is also considering temporarily relaxing rules on free allocation for industry, according to the report.

EU leaders are urging the European Union to present concrete proposals to curb energy prices, including a broader review of the EU ETS, previously scheduled for later this year, to help reduce carbon price volatility.

In this context, on Wednesday Italian Prime Minister Giorgia Meloni demanded an immediate suspension of the bloc’s emissions trading system. “Our expectation is that the EU allows us to change quickly, and structurally, this counterproductive mechanism.”

Meloni also noted that carbon costs make up around 25% of Italian consumers’ bills, significantly higher than the EU average of 11%, as stated by Ursula von der Leyen during her address to the European Parliament on 11 March.

However, according to Reuters, a group of eight countries has called on the EU to protect the EU ETS. “Making fundamental changes to the ETS, calling into question the ETS instrument itself, or suspending it, would constitute a very worrying step backwards,” the paper said. The document was signed by Spain, the Netherlands, Denmark, Finland, Luxembourg, Portugal, Slovenia and Sweden.