EU Commission President Ursula von der Leyen seems to have found a way out of the never-ending tensions in the oil and gas market, and out of the clutches of the perennial problem children Iran and Russia. She is bundling ETS revenues for climate technologies while betting on small nuclear reactors – a strategy paper with political dynamite.

Von der Leyen is walking a political tightrope – especially given the ongoing dispute between member states over the scope and structure of emissions trading. Image: X/Von der Leyen

BRUSSELS: At the recent EU summit, Commission President Ursula von der Leyen initiated a far-reaching realignment of European energy policy. At its core: a so-called ETS investment booster worth around 30 billion euros, flanked by an ambitious nuclear concept. Both initiatives share the same funding source – and the same strategic drive: Europe’s energy independence.

The ETS Investment Booster: Emissions Trading as an Investment Engine

The 30 billion euros are to come from revenues of the European greenhouse gas emissions trading system (ETS) and flow into clean technologies. Member states with lower incomes should particularly benefit from access to the fund. The EU Commission has announced that it will present concrete legislative proposals by july. Initial adjustments to the ETS are to be made in the coming days.

The initiative is politically sensitive: At the summit, there were significant tensions between countries like Poland, which demand relaxations in the ETS, and member states like Spain, which want to stick to the existing system. Tangible results remained elusive for now. Parts of industry have been criticizing the ETS for some time because it increases production costs and thus hampers competition with non-European companies.

Nuclear power as second pillar: SMR and the return to nuclear energy

In parallel, von der Leyen described Europe’s turn away from nuclear power as a “strategic mistake” at the nuclear energy summit in Paris. Europe has turned its back on a reliable, affordable, and low-emission energy source, said the Commission President.

Small modular reactors (SMRs) are considered the centerpiece of her nuclear strategy. Von der Leyen announced EU investment guarantees of 200 million euros to mobilize private capital providers. The goal is to have this new reactor generation operational by the early 2030s. In addition, the EU plans more than 5 billion euros for nuclear research in the next budget – including for the international fusion project ITER.

ETS funds both

What appears at first glance like two separate policy areas is actually a coherent overall strategy. Both the 30-billion fund for green industry and the 200-million guarantee for SMRs are to be financed from ETS revenues. The emissions trading system thus becomes the central financing engine of the European energy transition – regardless of whether it runs on wind and solar or new reactor technologies.

Von der Leyen’s logic is clear: Europe is neither an oil nor a gas producer. Fossil energy carriers make the continent dependent and expensive. Nuclear energy and renewables are to serve together as guarantors of supply security, price stability, and competitiveness.

Criticism from industry and politics

Not everyone shares von der Leyen’s optimism. Critics point out that there is practically no commercial market for mini-nuclear power plants worldwide yet, and most SMR projects are still in early development phases.

Germany’s Federal Environment Minister Carsten Schneider (SPD) spoke of a backward-looking strategy. If a technology still needs state support after decades and better alternatives have long existed, consequences must be drawn, said Schneider.

The dispute over the future of the EU Emissions Trading System (ETS) also remains unresolved. The Freedom Party of Austria (FPÖ) is calling for the complete abolition of the fund, while proponents point to its long-term price-reducing effect.

Conclusion: A balancing act with uncertain future

Von der Leyen is pursuing an energy policy of two speeds: short-term investments in renewable technologies via the ETS fund, medium-term return to nuclear power via SMRs. Financing both paths from the same system makes the strategy a political tightrope walk – especially given the ongoing dispute among member states over the scope and design of emissions trading.

Whether the Commission can turn its proposals into consensus legislation by july remains to be seen. The switches for Europe’s energy future are being set right now.

By Okay Altinisik | 20-3-2026, 17:47:49