The European Parliamentary Research Service (EPRS), which provides in-depth research and analytical support to Members of the European Parliament, published a paper on Tuesday outlining Member States’ positions on key issues related to the upcoming review of ETS1 and the Market Stability Reserve (MSR).

According to the document, many EU governments are, in various ways, calling for a slower phaseout of free allocations under the EU ETS. In March, a letter signed by ten countries, including Romania, called for extending free ETS allowances beyond 2034.

The signatories also urged the European Commission to slow the phaseout of free allowances starting in 2028. The EPRS report also notes that Germany “supports the expansion of free allocations (for exports), if effective carbon leakage protection cannot be achieved through CBAM.”

However, the issue that most divides EU member states is the potential temporary suspension of the EU ETS. “Following criticism from several Member States, the topic is now a high-level discussion, with interventions from Heads of State or Government opposing or supporting the suspension of the EU ETS,” the document states.

While Poland, Czech Republic, Slovakia, and Italy have called for the EU ETS to be suspended, eight EU countries—Denmark, Finland, Luxembourg, Portugal, Slovenia, Spain, Sweden, and Netherlands—rejected the idea in a joint paper in March.

Earlier, in February, French President Emmanuel Macron also opposed calls to suspend the EU ETS, arguing instead for maintaining the carbon market as a key tool for industrial transformation.

However, France has expressed concerns about high carbon prices and, together with Czech Republic and Poland, has advocated for the introduction of a price corridor. According to Reuters, a French document “called for the EU to establish an ETS price corridor defined in coherence with the Union’s emission reduction target and to review the functioning of the market stability reserve to correct its imperfections.”

The divisions among Member States add further uncertainty to the future design of the EU ETS. According to Euractiv, “The direction of travel is increasingly clear. The upcoming review is expected to combine short-term stabilisation measures with longer-term structural changes, particularly around allowance supply and market responsiveness.”