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Michele Morena identifies the establishment of the EU ETS as the most significant development currently shaping the 2025 commodities landscape.
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The system operates on a “polluter pays” principle, requiring firms to hold permits for every tonne of CO2 they emit.
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While emissions from power and industry installations fell by 5.8% between 2023 and 2024, aviation emissions within Europe rose by 15%.
When Michele Morena, Partner at Kreab, was asked at the inaugural TFG Geneva conference about the most significant development in the commodities industry shaping the 2025 landscape, his answer was simple: the establishment of the ETS system.
The European Union’s Electronic Trading System (EU ETS) is the world’s first international emissions trading system. In line with the ‘polluter pays’ principle, it caps greenhouse gas emissions from major emitters (power plants, heavy industry, etc.) and requires companies to hold allowances (“permits”) for each tonne of CO₂ they emit. Firms can trade these allowances, creating a market price for carbon.
Higher carbon costs have increased cost pressures in carbon-heavy commodities such as coal, steel, and cement.
As the European Commission’s 2025 Carbon Market Report outlined, EU ETS emissions are around 50% below 2005 levels, keeping on track to reach -62% by 2030. The report, which uses data from 2025, recalls:
- The first year that emissions from maritime transport were included under the EU ETS – making the maritime sector one to watch under the EU ETS in the coming year.
- Emissions from power and industry installations falling 5.8% between 2023 and 2024 under the EU ETS.
- Intra-European aviation emissions rising 15% year-on-year, partly due to the re-inclusion of non-domestic flights involving outermost regions.
