Several companies operating in energy-intensive sectors are calling for a fundamental reform of the European Union’s Emissions Trading System (ETS). This claim, reported by the “Handelsblatt,” references a petition signed by over thirty enterprises operating across Europe and addressed to the EU leaders.
In the letter, the companies urged EU Council President António Costa and the acting Chair, Cypriot President Nikos Christodoulides, to take immediate action to halt rising costs and prevent further damage to the foundation of Europe’s industry. Signatories included major corporations such as Arcelor-Mittal, BP, BASF, Thyssen-Krupp, Evonik, Covestro, Ineos, Trimet, Lhoist, and Solvay.
The companies further argued that the necessary preconditions for industrial transformation are absent, citing insufficient or non-existent infrastructure for electricity, hydrogen, and the transport and storage of CO2. They asserted that the ETS no longer reflects global realities, claiming that “Europe is effectively acting alone by imposing rapidly escalating CO2 costs on its industry.”
Under the current system, industrial businesses must purchase permits for every unit of greenhouse gas emitted into the atmosphere. Historically, some of these certificates were provided to companies for free, while the rest had to be purchased on the market. Costs are escalating because companies are not reducing their CO2 emissions as quickly as the available supply of allowances is shrinking. The revenue generated from the system is predominantly used for climate protection measures, such as establishing industrial hydrogen networks.
This pricing framework was shaped as part of the EU’s “Fit for 55” climate package, which steered the EU away from a pathway predicting over four degrees of global warming toward a path aiming for a limit of slightly over two degrees Celsius. As part of this transition, the free allocation of certificates was partially eliminated. To counteract the resulting competitive disadvantages, the EU implemented the Carbon Border Adjustment Mechanism (CBAM), which functions as a levy on CO2-intensive imports. Companies from countries that are also introducing their own CO2 certificate trading systems are expected to be exempt from this border tariff.
