EU climate and environment ministers held their first informal meeting in Dublin last Friday to discuss the European Commission’s proposed reform of the EU Emissions Trading System (ETS), laying bare deep divisions among Member States.

Ahead of the meeting, Bloomberg highlighted the growing rift between “countries including Sweden, Spain and the Netherlands, which favor a rapid expansion of clean energy,” and “a bloc led by Italy, Poland and Greece, which is concerned about the cost of moving away from fossil fuels.”

According to diplomats quoted by Climate Wire, one of the central issues dominating the Dublin talks was the Commission’s plan to make free ETS allocation conditional beyond 2030, which emerged as the main point of disagreement between Member States.

Under the plan, “80% of the amount of free allocation in each five-year period” would be granted annually upon submission of a decarbonisation investment plan, while “the remaining 20%” would be allocated only after verification that the planned decarbonisation investments had been successfully implemented. The measure has exposed sharp differences among Member States over how far the EU should go in linking free allowances to industrial decarbonisation.

Sweden emerged as the strongest critic, arguing that continuing free ETS allowances would reward companies that delayed decarbonisation while putting early investors in emissions reductions at a competitive disadvantage. “So you’re saying the free allowances should be phased out. I think we should stick to the plan and phase them out,” the official said, reiterating Sweden’s support for ending free allocations as scheduled.

Despite the deep divisions exposed in Dublin, the Irish Presidency is sticking to its timetable, aiming to present a first compromise text to the September Environment Council following technical work over the summer, with the objective “to get back to the December Council meeting with proposals with regard to ETS and an agreement.”