Many of the leaders shared the same sense of urgency, and of frustration at the lack of progress, much of which they are themselves responsible for, in further unifying the bloc’s economies

International News via Reuters:

European Union leaders said on Thursday it was urgent they find ways to cut energy costs and improve how the bloc’s border-free internal market works so Europe’s businesses can be competitive and survive aggressive economic rivalry from the U.S. and China.

While few concrete decisions are expected from the retreat at a Belgian castle, the gathering will provide clues on whether the EU’s 27 member states can overcome self-interest and agree a joint plan of action.

“We share a sense of urgency that our Europe needs to act,” said French President Emmanuel Macron, standing next to German Chancellor Friedrich Merz. The two – who disagree on many of the possible solutions – arrived together for the EU meeting.

Many of the leaders shared the same sense of urgency, and of frustration at the lack of progress, much of which they are themselves responsible for, in further unifying the bloc’s economies.

EU COUNTRIES NEED TO FIND COMPROMISES

“There’s so much talk and so little action, and this is a chance to at least reverse that trend,” Swedish Prime Minister Ulf Kristersson said. Czech Prime Minister Andrej Babis was even more blunt: “Only words, conferences and no action.”

Discussions will span themes including how to deepen the EU’s single market, forge ahead with a union of EU financial markets to allow the bloc to invest at scale and reduce Europe’s high energy costs. Those topics will test the member states’ readiness to compromise on their individual interests and act on pro-growth rhetoric.

TACKLE HIGH ENERGY COSTS

“We have to have a unified energy market, that is the only solution,” the Czech Republic’s Babis said, echoed by many of the other leaders. Industries in Europe face power prices that are more than double those in the U.S. and China, EU data shows.

“The main issue for European industry right now is energy costs,” Belgian Prime Minister Bart De Wever said, a day after business leaders urged the EU to act on that.

“We are not competitive and we risk losing the petrochemical industry, the steel industry, metals, and of course, this is the base of all prosperity.”

GERMANY AND FRANCE DISAGREE ON DIRECTION

While all EU countries want a more competitive bloc, they disagree on how to get there, and have done so for years.

Macron renewed his call on Tuesday for the EU to embark on more common borrowing to invest at scale and challenge the hegemony of the dollar. France is also pushing a “Made in Europe” strategy that would set minimum requirements for European content in goods bought with public money.

Germany disagrees with both ideas and says the key is to boost productivity rather than build new debt. It also stresses the need for trade deals, such as with South American bloc Mercosur, which France rejects.

“We have been discussing so long time and I think this is a time to take the decisions, because … time is running out,” Lithuanian President Gitanas Nauseda said.

MACRON WANTS JUNE DEADLINE FOR DECISIONS

Macron suggested an EU summit in June should be the deadline to take decisions jointly among all EU countries.

“We need to act fast and we need concrete decisions by June,” he said. “If, in certain areas, we are not advancing as 27 we have the right to opt for reinforced cooperation (among fewer EU members) to go faster.”

Former Italian prime ministers Mario Draghi and Enrico Letta, authors of two influential reports in 2024 on the EU’s competitiveness challenge and its single market, have been invited to share their views at Thursday’s meeting.

Draghi has warned that the EU faced “slow agony” if it does not carry out urgent reforms on multiple fronts.

Reporting by Philip Blenkinsop and Julia Payne; Additional reporting by Sudip Kar-Gupta, Anna Ringstrom, Ingrid Melander, Bart Meijer, Inti Landauro, Alex Chituc, Jan Strupczewski, Kate Abnett, Giuseppe Fonte; Writing by Ingrid Melander; Editing by Alex Richardson and Toby Chopra

The benchmark contract for EU carbon permits was down 7% at 73.08 euros per metric ton of CO2 at 1033 GMT, having earlier dropped to 72.18, its lowest level since August, LSEG data showed

International News via Reuters:

Europe’s benchmark carbon prices fell sharply on Thursday morning, as the leaders of countries including Germany, Italy and the Czech Republic said the EU should consider revising the bloc’s emissions trading system (ETS).

The benchmark contract for EU carbon permits <CFI2Zc1> was down 7% at 73.08 euros per metric ton of CO2 at 1033 GMT, having earlier dropped to 72.18, its lowest level since August, LSEG data showed.

The fall followed comments by German Chancellor Friedrich Merz late on Wednesday, at a gathering with industry executives, some of whom demanded the EU intervene to lower the carbon price.

“We should be very open to revise it, or at least to postpone it,” Merz told the event in the Belgian city of Antwerp.

The ETS is the EU’s most important climate change policy. It forces power plants and industries to buy CO2 permits when they pollute, and caps the amount of permits in the market, to curtail emissions over time.

Other EU leaders backed the idea on Thursday as they met in a Belgian castle for a summit on European competitiveness.

“We must start with a thorough review of ETS scheme and put a stop to the financial speculation surrounding the system,” Italian Prime Minister Giorgia Meloni told reporters ahead of the summit.

Czech Prime Minister Andrej Babis suggested revising a proposal he previously made to cap the price at 30 euros/t of CO2. “This is the only thing to save the industry immediately,” he said.

Carbon prices have decreased in recent weeks amid a perceived risk of political interference in the market where, currently, the price of carbon permits fluctuates freely, like other commodity markets.

Brussels has defended the ETS, which collects revenues from polluters, and rechannels them to national budgets – with the idea that governments use the cash to support low-carbon investments in industries – and to EU funds that do the same.

European Commission President Ursula von der Leyen on Wednesday criticised national governments for not using their ETS cash to support industries.

“Member states invest less than 5% of ETS revenues in industrial decarbonisation. I believe it is high time that member states step up,” she told the industry summit in Antwerp.

The EU is already planning to review the ETS, with a proposal due in Q3. That review was planned to redesign the system to comply with the bloc’s 2040 climate target rather than making short-term interventions to limit prices.

Reporting by Nora Buli, Kate Abnett; additional reporting by Giuseppe Fonte, Sudip Kar-Gupta, Inti Landauro; editing by Nina Chestney and Elaine Hardcastle

Lula’s engagements would include a bilateral with Indian Prime Minister Narendra Modi, a banquet hosted in his honour by Indian President Droupadi Murmu and attending an AI summit on February 19 and 20

International News via Reuters:

Brazil’s President Luiz Inacio Lula da Silva will be in India for a state visit from February 18 to 22, India’s foreign ministry said on Thursday.

Lula’s engagements would include a bilateral with Indian Prime Minister Narendra Modi, a banquet hosted in his honour by Indian President Droupadi Murmu and attending an AI summit on February 19 and 20, the statement from the ministry said.

Lula last visited India for the G20 Summit in September 2023.

Reporting by Shilpa Jamkhandikar; Editing by Alex Richardson