Major European Investors Call for Strengthening EU Carbon Market Ahead of Policy Review

A coalition of 45 major European institutional investors, including Allianz SE, L&G Asset Management, and the Church of England Pension Board, has warned EU leadership that maintaining a robust Emissions Trading System is critical for attracting private capital to finance Europe's industrial decarbonization. The investors' letter, sent ahead of June EU Council talks and a July 15 legislative review, directly counters pressure from Italy, Germany, and other EU countries backed by heavy industry lobbying to dismantle the ETS. The signatories argue that the ETS has proven effective, delivering approximately 50% emissions reductions from covered sectors since 2005 and tracking toward a 62% cut by 2030, with particular success in the power sector where coal use has declined and renewable generation has grown. Rather than weakening carbon pricing, the investors contend that Europe's industrial competitiveness problems stem from structural issues including high electricity prices, grid constraints, and limited access to affordable clean energy. They argue that the ETS functions as an economic signal guiding investment decisions and that dismantling it would undermine investor confidence while failing to address underlying competitive challenges.