March 24, 2026
The climate transition enters a critical economic phase
The year 2026 marks a structural shift in European climate policy. While previous years focused on establishing the regulatory framework, the impact of these policies is now directly reflected in costs, competitiveness, and investment decisions. The letter sent by the European Commission to EU leaders on 16 March 2026 explicitly confirms this: the current geopolitical context, including tensions in the Middle East, has immediate effects on energy, trade, and supply chains, and Europe’s response must be coordinated, rapid, and oriented toward economic resilience.
This paradigm shift is fundamental. Decarbonisation is no longer treated as a standalone objective but as a tool for energy security and strengthening industrial competitiveness.
EU ETS: a stable pillar undergoing strategic recalibration
In this new context, the EU ETS remains the central instrument of European climate policy. The Commission explicitly reaffirms that the system is market-based, technology-neutral, and provides long-term investment predictability. At the same time, it acknowledges the need to adapt to new economic and energy realities, particularly to manage volatility and industrial pressure.
The adjustment directions are already outlined: strengthening the Market Stability Reserve to limit excessive price fluctuations, updating benchmarks to reflect current industrial conditions, and defining a more realistic decarbonisation trajectory beyond 2030. These measures do not signal a weakening of the system but rather its consolidation as an industrial policy instrument.
For companies, the implication is direct: the carbon price is not temporary and will not disappear. It must be integrated as a structural variable into financial models, procurement strategies, and investment decisions, including for importing companies facing CBAM reporting obligations. In this context, EU ETS and CBAM become not only compliance mechanisms but key determinants of competitiveness.
Energy cost: a complex equation beyond carbon
A key element highlighted by the Commission is the real structure of electricity pricing. It is determined by four major components: the cost of energy itself, network costs, taxes and levies, and the cost of carbon.
This clarification is critical in the public debate, where carbon cost is often perceived as the main driver of rising energy prices. In reality, it is only one component, and in certain Member States electricity is taxed up to fifteen times more than gas, creating a major distortion in industrial electrification.
At the same time, the Commission emphasizes that the current pricing system based on “marginal pricing” remains fundamentally sound and should not be radically changed. Instead, proposed solutions focus on structurally reducing costs through accelerated investment in renewable energy, expansion of storage capacity, and modernization of grid infrastructure.
Energy security and the energy mix
A strong message in the document relates to the cost of energy dependence. Europe has already spent approximately EUR 6 billion more on fossil fuel imports in the context of recent geopolitical tensions, highlighting the economic vulnerability associated with this dependence .
At the same time, progress has been significant: the share of renewable energy in the EU electricity mix increased to approximately 48% in 2025, and together with nuclear energy, more than 70% of EU electricity is already low-carbon .
In Romania, renewable energy has reached approximately 40–45% of electricity generation, depending on hydrological conditions (with hydro driving annual variability). Including nuclear energy, more than 65–75% of electricity generation has been low-carbon in most recent years.
This combination highlights a critical reality: Europe has made progress in decarbonising electricity generation but remains dependent on fossil fuels in key sectors such as transport. Therefore, the energy transition is not only a climate obligation but an economic and strategic necessity.
Instruments for industry: stability and protection in transition
To manage the impact of energy and carbon costs on industry, the Commission promotes a set of concrete instruments. Long-term Power Purchase Agreements (PPAs) are considered essential for stabilising electricity prices and reducing exposure to market volatility.
At the same time, Member States can use state aid mechanisms to compensate up to 80% of indirect carbon costs for energy-intensive industries, reflecting a pragmatic approach: maintaining the carbon price signal while mitigating its impact on competitiveness .
This approach confirms the EU strategy: not eliminating the carbon cost, but managing its effects intelligently on the real economy.
Romania and the role of storage: transition to a flexible energy system
In this European context, developments in Romania provide a relevant example of energy system transformation. The rapid increase in storage capacity at prosumer level indicates a shift from a centralized system to a distributed and flexible one, where consumers also become energy producers.
This dynamic aligns with the EU’s strategic direction, which emphasizes rapid integration of low-carbon energy and the development of system flexibility, including through storage and demand-side management. In practice, storage becomes a critical element for system stability and for reducing dependence on fossil sources.
Industrial competitiveness: the new European agenda
The Commission’s letter also introduces a broader dimension of European competitiveness. Initiatives such as the Industrial Accelerator Act and the EU Inc. legal framework aim to reduce administrative barriers, stimulate investment, and create demand for low-carbon products manufactured in Europe .
At the same time, sustainability and supply chain resilience become central criteria in assessing competitiveness, reflecting the reality of a global economy shaped by geopolitical risks .
This indicates a fundamental shift: competitiveness is no longer defined solely by cost, but by the ability to operate within a decarbonised and resilient system.
Inevitable convergence
All these developments converge toward the same conclusion. Europe is not choosing between decarbonisation and competitiveness. It is building a model in which the two become interdependent.
EU ETS remains the central mechanism, while renewable energy and storage become the foundation for long-term cost reduction. In this context, companies that fail to integrate carbon into their strategies and adapt their operating models will lose competitiveness in a very short time horizon.
The transition is no longer optional. It is the new economic framework in which Europe operates.
Source: Balkan Green Energy News, ICE ECX, London and the European Commission, Bruxelles.