Italy’s Industry minister Adolfo Urso urged the European Union to suspend its carbon market until the bloc presents a revised proposal due this summer, citing the hardship faced by European businesses because of high power and carbon costs.

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The Emissions Trading System (ETS) is the bloc’s mechanism for making companies pay for their pollution, with the dual aim of reducing emissions and encouraging industry to invest in more sustainable alternatives.

In Europe, the ETS currently covers heavy industries, power plants as well as airlines and shipping. Additional sectors such as international aviation, landfills and incinerators will be included in the upcoming review by the European Commission.

But Urso said the ETS is to blame for Europe’s competitiveness problems because the bloc’s climate policy tool has a “perverse effect” and is preventing European companies from competing with China and the United States.

“We are all aware that the mechanism of the ETS, as it is currently drafted, is only a tax, a tariff on the energy-intensive companies that struggle to remain competitive,” Urso told reporters on the sidelines of a gathering of industry ministers in Brussels on Thursday. “It is necessary – we are all aware – to review it in a substantive way.”

“To do this properly, it is necessary to suspend the ETS mechanism while awaiting a reform that must necessarily be comprehensive,” Urso added.

Urso added: “If we are in the face of the collapse of the European chemical industry and the crisis of European ideology, we cannot wait for the time of negotiations within the European Union to find a solution.”

The Italian minister said that in the meantime, “we are looking for an effective organic solution,” adding that he will ask the European Commission to suspend the ETS.

Italy’s plea joins that of industry leaders who have recently asked the EU to urgently act to reduce energy and carbon costs. German Chancellor Friedrich Merz has recently touted the same idea, driving down carbon market prices, only to backtrack on it a few days later.

Nordic business leaders back ETS

In a letter sent to Commission President Ursula von der Leyen and EU Climate Commissioner Wopke Hoekstra, a group of Nordic industry associations representing Finland, Sweden, Denmark and Norway urged the EU to maintain the ETS, highlighting its role as a key European advantage and as a source of certainty for investments in clean technologies.

They backed the ETS as a “market-based and technology-neutral policy instrument” that helps reduce carbon dioxide emissions.

“Reforming the system must be done carefully, because it has such a significant impact on the economy and competitiveness, in addition to the climate,” the Nordic leaders suggested.

The four industry associations argued that future prosperity in the EU is linked to the ETS since its revenues can bring about decisive investments in clean energy production, critical infrastructure, electrification, and ultimately the decarbonisation of industry.

“Efficient use of the EU’s own resources is central to achieving almost all the Union’s major strategic aims, and these efforts require reliable access to both public and private financing,” reads the letter dated 23 February and seen by Euronews.

Since its inception in 2005, the ETS has slashed emissions by 39%, with revenues exceeding €260 billion, according to the EU data.

Hindering technological innovation

Carlo Carraro, President Emeritus and Professor of Economics at Ca’ Foscari University of Venice, criticised the Italian government’s stance on the ETS, saying the attack risks weakening a policy that has proven effective in reducing emissions in regulated sectors.

“Innovation and competitiveness are now inextricably linked to decarbonisation,” Carraro said. “Hindering the transition exposes businesses to increasing technological and financial risks and makes the country less competitive”.

Similar thoughts were voiced by Chiara di Mambro, Director of Strategy Italy and Europe at the environmental think tank ECCO.

“Suspending the ETS as proposed today or subsidising gas, as envisaged in the Government’s recent decree, would move Italy in the opposite direction (higher energy prices): weakening the price signal, increasing market uncertainty, and ultimately delaying the transition away from expensive fossil fuels,” di Mambro said.

Italy is already on track to overhaul its electricity market, which would strip carbon costs from power bills. Instead, Di Mambro suggests using fiscal revenues or dividends from energy companies to reduce the burden of levies on electricity bills.

Iran and the United States are holding indirect talks Thursday in Geneva over Tehran’s nuclear negotiations, viewed as a last chance for diplomacy, as America has gathered a fleet of aircraft and warships to the Middle East to pressure Tehran into a deal.

U.S. special Mideast envoy Steve Witkoff is passing messages with Iranian Foreign Minister Abbas Araghchi in an effort to convince his country to halt its enrichment of uranium, a key step to building a nuclear bomb, and curtail or stop its production of long-range missiles. The president’s son-in-law, Jared Kushner, is also in attendance.

The talks lasted some three hours before the American delegation left the site. Iranian state television reported that the talks would resume after a break.

Nearly five years after the Taliban’s takeover of Afghanistan, Kabul has appointed its first envoy to India, marking a significant milestone in diplomatic engagement between the two countries. 

Noor Ahmad Noor, a Taliban-appointed diplomat, has assumed responsibility as Chargé d’Affaires at the Afghan Embassy in New Delhi, the first such posting to India since the Taliban returned to power more than four years ago. The move is the latest step in cultivating goodwill, as India’s role evolves in Afghanistan.

The renewed political and economic engagement with the Taliban comes at a time of surging cross-border violence between Afghanistan and Pakistan, which has plunged relations between the two neighbors to a dangerously low point. Just this week, tensions flared back up after a fresh round of deadly strikes and clashes. And nuclear-armed India wasted no time in strongly condemning Islamabad over the attacks and voiced support for Kabul’s sovereignty.

Against this backdrop of sustained hostilities, India stands out as one country that has much to gain. Experts say India’s reset with the Taliban reflects a pragmatic policy, aimed at countering Pakistani influence while protecting its own long-term security interests in the region.
 

“This is a classic case of ‘the enemy of my enemy is my friend,’” Sid Dubey, a visiting professor at Bennet University in India, told Fox News. “The only thing the two parties are mutually aligned on is Pakistan and the enmity both have toward the Islamic Republic.”

Kabul’s rapidly deteriorating relationship with Islamabad factors heavily into India’s calculations. For decades, Pakistan sought what it called “strategic depth” in Afghanistan, backing Taliban factions to ensure a friendly government in Kabul. But now, as frictions rise over border disputes, closer coordination between India and Afghanistan stretches Pakistan’s capacity to manage tensions on multiple fronts. 

At the same time, analysts say, it gives India the opportunity to extend its influence in the region at the expense of another rival, China. Furthermore, Pakistan buffers India and Afghanistan, making strategic alignment between New Delhi and Kabul particularly significant.

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“Afghanistan is cursed by its geography and proximity to foreign powers who will always meddle,” Dubey explains, as regional fault lines only continue to sharpen. “And with virtually no American influence on the Taliban government anymore, Delhi feels secure in going ahead with its own India-centric Afghan policy.”

Like most other countries, India does not formally recognize the Taliban regime in Afghanistan. Nevertheless, both nations have been taking a series of quiet but significant steps to deepen ties. Over the last year, several high-level diplomatic interactions have been billed as groundbreaking. Cooperation has expanded across the board, from healthcare and humanitarian aid to cultural exchanges and economic projects.

Dubey claims there’s another big reason for Delhi’s push. “India supports all this in the hope or understanding that one day, if needed, India can use Afghanistan as a platform to strike Pakistan.”

For its part, Kabul is embracing this new era of cooperation, hailing the stronger ties with India as Pakistan views these developments with deep suspicion. Engagement with India also offers the Taliban a measure of legitimacy on the world stage. 

As Dubey noted, Afghanistan remains one of the poorest and least developed countries in the world, heavily dependent on external assistance, making India’s aid extremely beneficial.

If sustained, India’s growing engagement with the Taliban could reshape changing regional dynamics. A weakened Pakistan-Taliban relationship undercuts Islamabad’s long-standing leverage in Kabul, altering the formerly established balance of power. It also complicates China’s calculus, as Beijing weighs its own security concerns.

Looking further ahead, if Washington again expands its involvement in Afghanistan, New Delhi could serve as a key intermediary, given that U.S. and Indian ties are also on an upward trajectory.

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