Berlin and Brussels – More than three dozen industrial groups are calling for an end to the escalating costs associated with the EU emissions trading system. Their letter, dated June 16, 2026, is addressed to the leadership of the European Council. Signatories include BASF, Covestro, Evonik, Thyssenkrupp, ArcelorMittal, BP, Ineos, and Trimet. The companies are not demanding a complete withdrawal from emissions trading; however, they want to prevent CO2 costs from rising further due to the shrinking supply of allowances. Otherwise, they anticipate production relocation, reduced investment, and further strain on industrial sites across Europe.
Industrial groups seek to halt escalating costs in emissions trading
The EU emissions trading system requires industrial companies to purchase allowances for their CO2 emissions. The EU regularly reduces the total volume of these allowances to drive down emissions. However, a tighter supply can drive up prices. Currently, an allowance in the EU costs around 80 euros per tonne of CO2, whereas the price in the Chinese emissions trading system is approximately ten euros.
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Industrial groups view this as a significant competitive disadvantage. After all, European manufacturers compete with suppliers from countries that do not face comparable CO2 costs. At the same time, it is difficult to fully pass on higher costs for globally traded commodities such as steel, aluminum, or basic chemicals. The signatories are therefore calling for immediate measures to prevent further cost increases, explicitly citing the need to protect Europe’s industrial base.
Rising CO2 prices meet a lack of technology
The demand is primarily directed at the expected escalation in costs resulting from the further tightening of the emissions allowance supply. Lakshmi Mittal, Chairman of ArcelorMittal, is calling for the cost burden to be stabilized at current levels—a measure that should remain in place until economically viable alternatives become available. The company also warns of significantly higher steel costs should CO2 prices continue to rise.
Many industrial facilities can currently only reduce their emissions through substantial investment. Steelmakers, for instance, require large quantities of low-cost hydrogen and electricity. Cement and lime plants also need pipelines and storage facilities for captured carbon dioxide. However, this infrastructure is lacking at many sites. Consequently, companies cannot simply avoid higher allowance prices by rapidly switching technologies.
Border adjustment does not solve all competitive issues
The European Carbon Border Adjustment Mechanism (CBAM) is designed to make imports from countries with lower climate-related costs more expensive. Initially, it covers sectors such as steel, aluminum, cement, fertilizers, and hydrogen. At the same time, however, the EU is reducing the free allowances allocated to European manufacturers. Under current plans, these allocations are set to be phased out gradually by 2034. Industry representatives see this as a recipe for further cost escalation, particularly if CBAM fails to fully offset the financial burden.
Furthermore, the border adjustment mechanism offers no protection for European companies exporting to non-EU countries. In those markets, they continue to compete with manufacturers facing significantly lower CO2 costs. Furthermore, CBAM currently covers only certain basic materials. The EU is therefore considering extending it to include more highly processed steel and aluminum products. However, a final decision on this matter is still pending.
No EU Decision on Price Cap
The European Commission is preparing a proposal to revise the emissions trading system for July 2026. However, it has neither decided on nor officially announced a price cap. The review covers aspects such as the Market Stability Reserve, free allocations, and safeguards against the relocation of production. The European Parliament has also pointed to potential changes for the post-2030 period. The outcome of the legislative process remains open.
At the same time, there is resistance within the business community to a political cap on CO₂ prices. Companies that have already modernized fear being placed at a disadvantage compared to competitors with higher emissions. Investors also warn against frequent interventions in long-standing rules. The EU must therefore strike a balance between protecting industrial competitiveness and ensuring reliable investment conditions. However, the current move demonstrates that resistance from energy-intensive industries to further rising CO₂ costs is mounting significantly.
Author: Blackout News
Sources: Financial Times (17.06.26) – Handelsblatt (17.06.26) – Zeit (17.06.26) – Reuters (12.06.26) – Reuters (10.06.26)