EU industrial giants demand urgent reform of carbon pricing rules

Over three dozen major European manufacturers have sent a letter to EU Council President António Costa and Cypriot President Nikos Christodoulides. The signatories include ArcelorMittal, BP, BASF, ThyssenKrupp, and other industrial giants. They warn that current conditions threaten Europe’s industrial base. Under EU rules, industrial plants must buy pollution allowances to emit greenhouse gases. Previously, some permits were given for free, but now most must be purchased on the market. This has increased costs as firms reduce emissions more slowly than the available allowances shrink.

The EU’s Fit for 55 climate package phased out free permits to shift from a path of over four degrees of warming to one limiting temperature rise to just over two degrees. To offset competitive disadvantages, the EU introduced the Carbon Border Adjustment Mechanism (CBAM), a tariff on carbon-intensive imports, with exemptions for countries with their own emissions trading systems.

The companies argue that the Emissions Trading System no longer reflects global realities. They claim Europe is acting alone by imposing rapidly rising CO₂ costs on its industries. The letter also states that infrastructure for electricity, hydrogen, and CO₂ transport and storage is lacking or inadequate.

Revenue from the Emissions Trading System is reinvested in climate protection measures, such as expanding hydrogen networks for industry. The signatories now urge immediate action to halt rising costs and prevent further damage to Europe’s industrial base in the upcoming reform of the system. The letter calls for urgent changes to the EU Emissions Trading System. It highlights the need for better infrastructure and a more balanced approach to carbon costs. Without these, the companies warn of continued harm to Europe’s industrial competitiveness.