In a second publication, @phuc-vinh.bsky.social discusses the recent ETS2 postponement by Member States, provides a mapping of their positions on ETS2, and proposes a significant reform to address country concerns while ensuring an ETS2 effective implementation. institutdelors.eu/content/uplo...

You can check out the full study here: institutdelors.eu/content/uplo...

We also highlight the need for well-designed regulatory measures to ensure CO2 price effectiveness, to smartly combine compensation with investment tools, and to coordinate such investment support to provide a demand stimulus to EU cleantech industries.

Based on our findings, our recommendations stress the importance of a strict earmarking of ETS2 revenues and the visibility of support measures, and discuss how to best target citizens through redistribution mechanisms.

Our analysis highlights major differences in the design of compensation mechanisms and identifies country-specific best practice examples for investment support and accompanying policies.

We study the political processes surrounding their implementation as well as selected regulatory, redistribution and investment measures linked to the national CO2 prices in these countries.

To inform these exercises, our policy paper delves into three country cases (France, Germany, Austria), where national carbon price systems are already in place.

While currently only 9 EU Member States have national carbon price systems in place, with ETS2 a common price will apply across the Union, requiring to set up national social climate plans and identify spending priorities for the expected national cabron price revenues.

However, without adequate accompanying compensation and investment measures, additional costs for citiziens will not be socially acceptable and might lead to a reversal of climate policies.

The introduction of a CO2 price for fossil fuels in the housing and mobility sectors is a key measure to ensure that the EU will be able to achieve it climate objective.

(3) Increase and better coordinate EU and national spending
(4) Maximize the utility of state aid support through accompanying policies

Key recommendations:
(1) Develop a more evidence-based approach through improve state aid reporting and evaluation.
(2) Create a comprehensive, coherent and agile EU state aid framework geared towards common objectives

Check out our full paper with plenty of visualized data and analysis here:
institutdelors.eu/en/publicati...

Ideally, this EU approach to state aid would include common funding mechanisms allowing the Union to co-finance IPCEIs alongside national governments. National contributions could then benefit from the exemption for the co-financing of EU-funded programs under the new SGP.

Second, we underscore the need to strengthen the IPCEI instrument, with an enhanced role for the European Commission in ensuring that projects are selected based on merit rather than Member States’ fiscal capacity to provide subsidies.

First, we advocate for phasing out temporary crisis frameworks by the end of 2025. Instead, the EU should prioritize consolidating permanent state aid instruments, such as GBER aid and IPCEIs, to balance policy flexibility and pan-European strategic coordination.

Our analysis reveals significant cross-country variation in both the levels and composition of national state aid across these three domains. To avoid a subsidy race between Member States, we propose several policy solutions.