On 18 June 2025, the LIFE Effect project hosted the inaugural session of the Carbon Pricing Hub (CPH), a new space for timely and expert-led dialogue on the EU Emissions Trading System (ETS), including the forthcoming ETS2. The CPH aims to foster collaboration between researchers, policymakers, and civil society on the future of carbon pricing in Europe.

The first session was organised by ZERO – Associação Sistema Terrestre Sustentável, and moderated by Eleanor Scott from Carbon Market Watch (CMW). The event opened with a keynote address from MEP Michael Bloss (Greens/EFA, Germany), who offered insights into the evolving political landscape surrounding the EU’s climate targets.

Launch of a new study

At the core of the session was the launch of a new study titled “The EU ETS and the 2040 Climate Target” commissioned by Carbon Market Watch and developed by the Oeko Institute under the LIFE Effect project.

The study explores how the ETS – the EU’s main tool for pricing carbon – can support the bloc’s 2040 climate ambitions. It looks at different policy options, including allowing international carbon credits (under Article 6 of the Paris Agreement) or carbon dioxide removals (CDR) to count towards ETS obligations.

The authors conclude that while these options may seem appealing to certain industry players, they pose serious risks. They could weaken the environmental impact of the ETS and distract from the immediate goal of cutting emissions now.

“The ETS is finally functioning as a proper climate tool,” said Sam Van den plas, policy director at Carbon Market Watch. “Instead of introducing risky loopholes, we need to strengthen what’s already working.”

The study stresses that the current design of the ETS, which puts a price on pollution and reinvests revenue into climate solutions, is already a powerful and cost-effective way to decarbonise the European economy.

A high-level panel discussion

Following the presentation, a panel of high-level experts reflected on the study’s findings and their significance for future climate policy. Speakers included: Beatriz Yordi, director at DG CLIMA, responsible for the ETS and international carbon markets; Sam Van den plas, policy director, Carbon Market Watch; and Ola Hansén, public affairs director, Stegra Steel

A common message emerged: protect the integrity of the ETS. The panel warned that introducing Article 6 credits or unproven CDR technologies could undermine the credibility and impact of the system if not handled with care.

They also highlighted the risk that relying on carbon removals in the ETS could shift attention away from urgent emissions reductions and might open the door to low-quality, unreliable natural sequestration in the future.

Final recommendations: Keep the ETS strong

To support the study, Carbon Market Watch released a concise policy briefing that lays out clear, actionable recommendations:

• Keep international offsets and carbon removals out of the ETS, they undermine real climate progress
• Don’t change the Market Stability Reserve (MSR) or Linear Reduction Factor (LRF) before 2035 both are doing their job
• Set separate targets for emissions reductions and carbon removals, this keeps priorities clear and measurable
• Use ETS2 revenues to support people fairly with robust social protections and targeted investments

Looking ahead

This session also marked the formal launch of the Oeko-Institut’s report, which will contribute to policy discussions ahead of the release of the EU 2040 Climate Target in July.

As LIFE Effect continues, the Carbon Pricing Hub will serve as an essential platform for unpacking complex topics, sharing evidence, and keeping climate policy aligned with scientific reality and social justice.

Watch the meeting

The meeting was recorded and is available to view in the video below