EU leaders have tasked the European Commission with overhauling the bloc's emissions trading system (ETS) by July to combat soaring energy costs driven by the war in the Middle East and attacks on Qatari gas infrastructure. The emergency measures, agreed at a summit yesterday, aim to shield industries and consumers from surging fossil fuel prices while preserving the ETS's core function. Commission President Ursula von der Leyen announced an €30bn ETS investment booster to fund green projects, alongside extending free carbon allowances for industries beyond 2035.

However, the package falls short of demands from countries like Italy and Austria for deeper ETS reform, leading to warnings from German Chancellor Merz against interference. The move reflects a tectonic shift in ETS dogma, prioritizing short-term relief for the most affected member states. Questions about extending the ETS to new sectors and easing carbon costs for heavy industry will be addressed at a June summit.

Meanwhile, EU leaders also called for a moratorium on strikes against energy infrastructure in the Middle East following yesterday's attacks on Qatar's South Pars gasfield, a critical EU supplier.