The EU energy battle rages on

BRUSSELS — No middle ground has been found on European energy policy, leaving Italy with little more than a token concession. Overnight between Thursday and Friday, the European Council reached an agreement on its final summit conclusions, though in reality, the text serves as little more than a formal acknowledgment of unresolved deadlock. Italy’s demands Italy, alongside six other member states — Greece, Cyprus, Hungary, Poland, Slovakia, and the Czech Republic — had pressed for immediate, short-term interventions to lower petrol and gas prices. For Rome, long-term visions are secondary; the crisis is unfolding right now.Italy continues to face some of the highest energy prices in Europe — particularly for natural gas, which costs nearly twice as much as in Spain and a third more than in Germany. Consequently, Rome bears a disproportionate burden in the current energy crunch, compounded by long-standing structural delays in rolling out renewable energy.The compromise wording in the final text fails to defuse the conflict, offering Italy and its allies virtually no tangible gains. ETS at the core of the dispute At the core of the dispute remains the EU Emissions Trading System (ETS), under which companies purchase carbon allowances for the right to pollute. The system has also been used by the EU to finance the green transition.Italian Prime Minister Giorgia Meloni pressed for a revision of the mechanism, particularly the trading of allowances on the secondary market, which drives up prices and increases costs for businesses. Rome also sought to postpone the implementation of ETS2 — set to take effect in 2028 and extend carbon pricing to building heating and road transport — a request that was firmly rejected. The diplomatic impasse was formally bypassed with a vague clause in the final declaration, which "invites the Commission to update the assessment of all impacts of the system, paying particular attention to its design and relevant safeguards." Crucially, however, the text omits any reference to the specific "economic and social" repercussions that the blocking minority had repeatedly highlighted. The document concludes with a generic nod toward the "crucial importance of addressing high energy prices." There was, however, some good news for Meloni: the European Commission approved temporary measures to ease Italy’s soaring energy bills, allowing the government to offset higher gas costs. Meloni hailed the decision as "another important achievement for Italy", although the relief does not cover the costs associated with the EU’s emissions trading system. No to temporary exemptions The Meloni-led coalition had held out hope for temporary regulatory exemptions, none of which materialized. The Italian Prime Minister advocated for direct interventions to curb pump prices for fuel and natural gas. These proposals met fierce resistance from Northern Europe's fiscal hawks, who suspect Italy of attempting to dismantle the broader EU decarbonization agenda.Instead, the Council confirmed that only state aid measures would be permitted. The practical upshot is stark: nations with deep pockets, such as Germany, can afford to slash fuel excise duties to shield their citizens, whereas heavily indebted nations like Italy lack the fiscal headroom to utilize such measures. Deficit flexibility talks postponed Lastly, Prime Minister Meloni tabled a request before the European Council for "additional deficit flexibility" to cushion the blow of inflationary shocks. However, the 27 leaders have not considered the proposal for now, leaving it to the European Commission to examine in the coming months. The widening rift The widening rift between the fiscal hawks and the "cohesion" bloc is equally evident in discussions surrounding the EU’s upcoming Multiannual Financial Framework (MFF). While Northern nations are demanding budget cuts amounting to hundreds of billions of euros, Southern and Eastern states are pushing for an expansion — a path that currently appears all but blocked.With the European political calendar shifting into election season, the battle over energy is set to escalate in the coming weeks. For Italy, where voters head to the polls next year, the political stakes could not be higher. This article was reviewed by an external translation partner