FOCUS CORNER

The EU ETS has played a real role in reducing European emissions. But it no longer operates in the context in which it was originally conceived. In a Europe shaped by higher energy costs, asymmetric global competition and the return of industrial policy, the issue is no longer whether carbon pricing should be defended or challenged in abstract terms. The real question is how it should be positioned within a broader balance between decarbonisation, industrial competitiveness and economic resilience. This Focus Corner explores why carbon pricing alone is no longer enough — and why instruments such as CBAM and the NZIA have become essential parts of Europe’s response.

COP30 did not deliver a breakthrough in ambition. What it did deliver was something more consequential: the end of the illusion that climate transition can still be globally coordinated, uniform, and centrally disciplined.
Belém revealed a fragmented but more honest reality, where multiple coalitions pursue different pathways at different speeds. This is not an optimal outcome, but it may be preferable to the paralysis of pretending that one global pathway still exists. COP30 did not resolve this tension—but it made it impossible to ignore.

Decarbonisation is often presented as economically neutral, if not cost-free. It is neither. The real issue is not only how much the transition costs, but when those costs materialise and who ultimately bears them. Capital expenditure is concentrated, risks are asymmetric, and system-level efficiency does not automatically translate into viable decisions for individual actors. Treating decarbonisation as a technical, industrial and financial challenge — rather than an ideological one — is not a delay tactic. It is a prerequisite for making the transition durable.

Europe’s energy transition is often discussed in terms of ambition and targets.
Less attention is paid to execution, system constraints and industrial competitiveness.
This article reflects on the trade-offs that will ultimately determine whether the transition succeeds.