A message from Markus Kamieth, Cefic President
The revision of the European Emissions Trading System (ETS) comes at a critical moment for Europe’s chemical industry. Since 2022, our industry has already lost around 10% of European production capacity and the number of restructurings and insolvencies is unprecedented. This alarming trend is continuing. Losing industrial production means losing jobs, innovation, value chains and strategic autonomy.
Europe cannot succeed in its green transition, if it weakens the industrial base that has to deliver it.
This is a clear signal and an urgent call for action to policymakers: 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. Key parameters – from the cap trajectory to free allocation – must reflect industrial realities, global competition, and the availability of enabling conditions. Otherwise, the outcome is predictable: investments will leave Europe before emissions do.
This also applies to the ETS benchmarks update for 2026-2030. For the chemical industry, the results are largely excessive, unrealistic, and do not reflect the seriousness of the situation our industry is facing. These updates are a substantial setback to European industry’s competitiveness.
The risk of carbon leakage is amplified by the slow progress on enabling conditions: long delays in building and accessing grids and infrastructure, limited access to affordable low-carbon energy, and weak market pull for low-carbon products. At the same time, companies are expected to mobilise massive investments to abate emissions – often without a viable business case.
With the upcoming reform, the ETS must support emission abatement – not create impossible choices for companies through conditionality for continued free allocation. Free allocation is a carbon leakage safeguard, not an investment subsidy. 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. That is not a credible transition pathway.
The ETS is a powerful tool. But in its current design, it cannot deliver industrial transformation – and it cannot do so on its own. Carbon pricing only works when the right enabling conditions are in place: 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.
Europe’s climate ambition is clear, but ambition must work in the real economy. Companies invest when the framework is predictable, when projects are bankable, and when global competitiveness is preserved. If these conditions are not met, investment will simply go elsewhere.
The objective must be clear: drive industrial transformation in Europe – not deindustrialisation.