Climate Group's response to the European Commission’s proposal to suspend the ETS invalidation clause

London, UK, 1 April 2026 - Today, the European Commission published a proposal to amend the Market Stability Reserve (MSR) of the EU Emissions Trading System (EU ETS), stopping the automatic invalidation of excess carbon permits held in the reserve. The proposal follows commitments made by Commission President von der Leyen at the March European Council. It will now go to the European Parliament and Council for adoption under the ordinary legislative procedure. A broader review of the EU ETS is expected in July 2026.

Helen Clarkson, OBE, CEO of Climate Group, said:

"This proposed amendment is a knee-jerk reaction to the war, but it’s only creating uncertainty for companies. It risks weakening Europe’s carbon market by lowering the carbon price long-term and reducing pressure on industries to cut emissions. Yes, energy costs are weighing on companies, especially since the war in the Gulf broke out. But every energy crisis proves the same point: as long as Europe relies on energy markets it can’t control, prices will remain volatile. This proposal only layers political uncertainty on top. 

The business we work with, especially our SteelZero members – businesses investing in low emission steel – have told us over and over again: they need regulatory stability, which includes a carbon price that predictably tightens over time. If that trajectory starts to shift, confidence will go with it."

ENDS

Notes to editors

More than 100 companies and investors, signed an open letter to European Heads of State and Government in March 2026 urging leaders to maintain a strong and stable EU ETS. The signatories argued that undermining the ETS would erode investment certainty, penalise businesses that have already committed to decarbonisation, and leave Europe without a credible plan to compete in the industries of the future. 

About The Climate Group 

The Climate Group drives climate action. Fast. Our goal is a world of net zero carbon emissions by 2050, with greater prosperity for all. We focus on systems with the highest emissions and where our networks have the greatest opportunity to drive change. We do this by building large and influential networks and holding organisations accountable, turning their commitments into action. We share what we achieve together to show more organisations what they could do. We are an international non-profit organisation, founded in 2004, with offices in London, New Delhi and New York. We are proud to be part of the We Mean Business coalition.

About SteelZero

SteelZero is a global initiative bringing together forward-looking organisations to speed up the transition to a net zero steel industry. Led by international non-profit the Climate Group in partnership with ResponsibleSteel, organisations that join SteelZero make a public commitment to procure, specify or stock 100% net zero steel by 2050. By harnessing their collective purchasing power and influence, SteelZero is sending a strong demand signal to shift global markets and policies towards responsible production and sourcing of steel. #SteelZero