Italy has intensified the debate over the future of Europe’s carbon pricing framework, calling for a temporary suspension of the EU’s Emissions Trading System (ETS) amid concerns about industrial competitiveness.

During a recent meeting of EU industry ministers in Brussels, Italy’s Industry Minister Adolfo Urso urged the European Union to suspend the ETS until a comprehensive reform is agreed and a revised proposal is presented later this year. The minister argued that, in its current form, the ETS imposes a “tax” on energy-intensive companies that hampers their ability to compete globally, particularly against firms in China and the United States.

The ETS, the EU’s flagship carbon market mechanism, requires major industrial and energy players to purchase permits for CO₂ emissions. It has been credited with significant emission reductions and raising billions in revenues for climate investment since its launch.

Supporters of the carbon market argue it remains essential for long-term decarbonization and provides investment certainty. Nordic industry groups and other stakeholders have defended the ETS as a cornerstone of EU climate policy, exposing divisions within the bloc on the path forward.

The debate comes as the European Commission prepares to publish detailed reform proposals for the carbon market later in 2026, which could reshape its scope and pricing mechanisms in light of economic competitiveness pressures.