Spain has strongly opposed proposals to suspend the EU’s emissions trading system (ETS), warning that dismantling it would be a “big error” during the energy crisis triggered by the Iran conflict. Italy and other nations advocate halting the scheme to ease price shocks, as the closure of the Strait of Hormuz disrupts 20% of global oil and gas shipments. Spain’s Energy Minister Sara Aagesen Muñoz called the ETS critical for decarbonization, stating: “We can’t ignore lessons from Ukraine,” where the bloc preserved the system despite gas supply cuts.

The ETS, which mandates companies to hold carbon allowances, has driven green innovation in Europe. Spain, generating 57% of its electricity from renewables—primarily solar—faces less exposure to gas price volatility. Aagesen highlighted Spain’s “competitive edge” in avoiding gas-dependent pricing. Meanwhile, Italy’s PM Giorgia Meloni and German Chancellor Friedrich Merz pushed for ETS reforms, causing carbon prices to drop 7% to €71.40 per tonne after Merz’s criticism.

Von der Leyen’s proposed review aims to stabilize ETS by reinvesting proceeds into decarbonization and using a carbon credit reserve to curb price swings. Spain plans domestic measures to shield consumers, including aid for fishing, farming, and transport sectors hit by price hikes. The government rules out replicating Ukraine-era petrol subsidies or VAT cuts.

As the EU debates ETS’s future, Spain’s stance underscores a divide: fossil fuel-dependent states seek immediate relief, while renewables leaders prioritize long-term climate goals. The Carbon Market Review will intensify this week, with Spain’s model offering a blueprint for balancing energy security and sustainability.