Cefic warns of emissions trading reform risks accelerating deindustrialisation

Brussels – European chemicals industry council, Cefic has urged policymakers to overhaul the EU emissions trading system (ETS), warning that the current framework risks driving investment and production out of Europe.

In a 30 June statement, Cefic president Markus Kamieth said the planned ETS revision comes as the European chemical industry has already lost around 10% of its production capacity since 2022, alongside a wave of restructurings and insolvencies.

"Europe cannot succeed in its green transition, if it weakens the industrial base that has to deliver it," Kamieth said.

In what Kamieth described "a clear signal and an urgent call for action to policymakers," Cefic said the ETS framework must get the fundamentals right, "well before 2030."

"Europe can no longer afford a system that tightens faster than industry can realistically transform," said the Cefic leader.

Key parameters – from the cap trajectory to free allocation – must reflect industrial realities, global competition, and the availability of enabling conditions, he added.

Otherwise, Kamieth warned, "investments will leave Europe before emissions do."

The association also criticised the proposed 2026-2030 ETS benchmark updates, describing them as "largely excessive, unrealistic" and damaging to the competitiveness of Europe's chemical sector.

Kamieth warned that slow progress in expanding electricity grids, infrastructure and access to affordable low-carbon energy, combined with weak demand for low-carbon products, was increasing the risk of carbon leakage.

He stressed that with the upcoming reform, the ETS must support emission abatement – not create "impossible choices for companies through conditionality for continued free allocation." 

"Companies should not be pushed to invest in technologies that are not yet feasible at scale, economically viable or supported by markets – while facing reduced free allocation and rising carbon costs, if they cannot," the Cefic president added. 

According to Kamieth, in its current design, the ETS cannot deliver industrial transformation on its own, arguing that carbon pricing only works when "the right enabling conditions are in place."

These include access to affordable low?carbon energy, the necessary infrastructure, and functioning markets for low?carbon products.

"Without these, tightening the ETS risks becoming a cost driver rather than a transition driver," he warned.

Kamieth concluded that the objective of the system must be clear: "drive industrial transformation in Europe – not deindustrialisation."