EU carbon market costs Czechia nearly $8B, prompting reform drive

By Mehmet Solmaz

BIRMINGHAM, England (AA) — Czech Prime Minister Andrej Babis said reform of the European Union’s emissions trading system is his government’s top priority, calling the bloc’s carbon market an “absolute disaster” for the Czech economy.

Speaking at a press briefing on Friday, Babis said the country has lost nearly 160 billion Czech crowns ($7.8 billion) as a result of the system, which requires power plants and heavy industry to purchase allowances for each ton of carbon dioxide they emit.

The EU Emissions Trading System, a central pillar of the bloc’s climate policy, has seen carbon prices rise significantly in recent years, increasing costs for energy producers and manufacturers. The Czech Republic, which relies heavily on coal-fired power and energy-intensive industry, has argued that the higher prices undermine competitiveness.

Babis said he is working to build a coalition of what he called “friends of European competitiveness” to push for changes to the EU’s original carbon market, known as ETS1. According to the prime minister, Italy, Germany, Austria, Slovakia, Poland and Hungary support the Czech position.

He said other key priorities for the government include energy policy, healthcare reform and measures to boost construction and improve housing affordability.

The European Commission has defended the emissions trading system as an effective market-based tool to reduce greenhouse gas emissions and meet the EU’s climate targets.