As the European Union prepares for the upcoming July review of the EU Emissions Trading System (EU ETS), debate over the future of the bloc’s flagship carbon market is intensifying, with stakeholders advancing different priorities and concerns regarding the balance between economic competitiveness and climate ambition.

In a public statement published on Monday, the European Banking Federation (EBF) advocated for “a predictable carbon price as a driver of investment,” warning that “any weakening of the system would therefore not only undermine the investment signal but also constrain the financial resources available for transition investments.”

A coalition of major European airlines and aviation associations has also warned against extending the EU ETS to cover emissions from all international flights departing the EU. The groups argue that such a move would increase costs for passengers and cargo operators while potentially distorting competition.

Meanwhile, heavy industry groups are calling for stronger safeguards to protect European manufacturers from rising carbon costs and international competition. In a position paper presented last month, European Aluminium called for a post-2030 EU ETS that safeguards industrial competitiveness through continued carbon leakage protection, robust CBAM implementation, indirect cost compensation, and greater use of ETS revenues to support industrial decarbonisation.

Similarly, IFIEC Europe, representing industrial energy users, has urged the European Commission to suspend the planned update of ETS heat and fuel fallback benchmarks for the 2026–2030 period.

In a letter addressed to Commission President Ursula von der Leyen and co-signed by several energy-intensive industry associations, the federation argued that the proposed benchmark reductions do not reflect the technological realities of industrial sectors and could significantly weaken carbon leakage protection by reducing free allocation levels.

The growing number of position papers and public interventions highlights the high stakes of the EU ETS review, as policymakers come under increasing pressure to reconcile industrial competitiveness with the EU’s climate objectives.