Four ministers urged Emmanuel Macron and François Bayrou to adopt the EU's ETS2 carbon market, but the executive branch declined due to political concerns over fuel and heating costs.
Key facts
- •The letter was signed by Eric Lombard, Amélie de Montchalin, Agnès Pannier-Runacher, and Marc Ferracci.
- •The proposed ETS2 extension would apply carbon pricing to road transport and building heating.
- •The Council of Mandatory Levies estimated the reform could generate approximately 7.3 billion euros for the French state budget.
- •France has not yet transposed the directive, despite an initial EU deadline of June 2024.
- •Political opposition to the measure includes the Rassemblement national, which has called for its suppression.
In a letter dated May 26, 2025, four French ministers pressed President Emmanuel Macron and François Bayrou to implement the European Union's ETS2 directive, which extends carbon market pricing to road transport and buildings. Despite the potential to generate significant revenue for the climate transition, the executive branch ultimately decided against the move, citing a lack of parliamentary majority and fears of political backlash similar to the 'Gilets jaunes' movement.
By the numbers
Financial Potential and Proposed Compensation
The ministers argued that adopting the directive would have provided 1.2 billion euros annually in funding from the Social Climate Fund starting in 2026. This revenue could have supported social leasing for electric vehicles, heat pump subsidies, and energy vouchers. To mitigate the impact on households, the ministers proposed neutralizing fuel price increases by reducing other taxes and providing targeted compensation for low-income households regarding heating costs.
Political and Economic Concerns
The reform is considered politically sensitive because it would increase gasoline prices by an estimated 12 to 15 cents per liter. Critics, including former Housing Minister Valérie Létard, expressed concerns about the feasibility of protecting vulnerable tenants who lack alternatives to gas heating. While the EU has delayed the implementation of the ETS2 market until 2028, France remains one of the few member states that has not yet transposed the directive or submitted a plan for the Social Climate Fund.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Politico Europe.
