On September 15, 2022, ISDA co-signed a letter with seven other trade associations on the importance of safeguarding the EU Emissions Trading System (ETS) following recent proposals by the European Parliament, which risk undermining the efficient functioning of the EU ETS and put at risk the EU’s ability to meet its climate goals in an efficient manner.

The letter raises concerns about support by members of the European Parliament for amendments to limit participation in the EU ETS to compliance entities and financial intermediaries purchasing allowances on their behalf, amid unsubstantiated claims that rising energy prices are directly linked to speculative behavior by financial intermediaries. The letter points to evidence from the European Securities and Markets Authority in its report on the EU carbon market and the European Central Bank’s analysis on the role of speculation during the recent increase in EU emissions allowance prices, which demonstrate that recent spikes in the carbon price have been driven by changing market fundamentals. The letter notes that a diverse ecosystem of participants ensures that the EU’s carbon market is resilient, less costly to access, and better equipped to provide hedging and risk management solutions to companies, and urges co-legislators not to impose the restrictions.