By Nora Buli OSLO, Feb 12 (Reuters) - Europe's benchmark carbon prices fell sharply on Thursday morning, following comments from German Chancellor Friedrich Merz suggesting the EU must be open to
EU Carbon Prices Decline as Leaders Call for Market Intervention
EU Carbon Market and Political Influence
By Nora Buli and Kate Abnett
Recent Price Trends
OSLO/BRUSSELS, Feb 12 (Reuters) - Europe's benchmark carbon prices fell sharply on Thursday morning, as the leaders of countries including Germany, Italy and the Czech Republic said the EU should consider revising the bloc's emissions trading system (ETS).
Political Reactions
The benchmark contract for EU carbon permits <CFI2Zc1> was down 7% at 73.08 euros per metric ton of CO2 at 1033 GMT, having earlier dropped to 72.18, its lowest level since August, LSEG data showed.
Future of the ETS
The fall followed comments by German Chancellor Friedrich Merz late on Wednesday, at a gathering with industry executives, some of whom demanded the EU intervene to lower the carbon price.
"We should be very open to revise it, or at least to postpone it," Merz told the event in the Belgian city of Antwerp.
The ETS is the EU's most important climate change policy. It forces power plants and industries to buy CO2 permits when they pollute, and caps the amount of permits in the market, to curtail emissions over time.
Other EU leaders backed the idea on Thursday as they met in a Belgian castle for a summit on European competitiveness.
"We must start with a thorough review of ETS scheme and put a stop to the financial speculation surrounding the system," Italian Prime Minister Giorgia Meloni told reporters ahead of the summit.
Czech Prime Minister Andrej Babis suggested revising a proposal he previously made to cap the price at 30 euros/t of CO2. "This is the only thing to save the industry immediately," he said.
Carbon prices have decreased in recent weeks amid a perceived risk of political interference in the market where, currently, the price of carbon permits fluctuates freely, like other commodity markets.
Brussels has defended the ETS, which collects revenues from polluters, and rechannels them to national budgets - with the idea that governments use the cash to support low-carbon investments in industries - and to EU funds that do the same.
European Commission President Ursula von der Leyen on Wednesday criticised national governments for not using their ETS cash to support industries.
"Member states invest less than 5% of ETS revenues in industrial decarbonisation. I believe it is high time that member states step up," she told the industry summit in Antwerp.
The EU is already planning to review the ETS, with a proposal due in Q3. That review was planned to redesign the system to comply with the bloc's 2040 climate target rather than making short-term interventions to limit prices.
(Reporting by Nora Buli, Kate Abnett; additional reporting by Giuseppe Fonte, Sudip Kar-Gupta, Inti Landauro; editing by Nina Chestney and Elaine Hardcastle)
