The EC has rejected proposals to protect exporters under the CBAM

Industry, non-governmental organisations and Members of the European Parliament are dissatisfied with the proposals under the ETS reform

The reform of the Emissions Trading Scheme (ETS) proposed by the European Commission has failed to meet the expectations of European businesses. Despite earlier promises, the document does not include any support mechanisms for EU exporters producing carbon-intensive goods that fall under the Carbon Border Adjustment Mechanism (CBAM). This is reported by Eurometal.

Industry associations point out that, whilst the CBAM protects domestic steel and fertiliser producers from imports from third countries, European exporters remain completely unprotected in external markets. The European steel association Eurofer has stated that the long-awaited export support measures are ‘still missing’ from the reform.

The lobby group Fertilizers Europe considers the European Commission’s decision to postpone the full abolition of free ETS allowances for CBAM sectors from 2034 to 2038 to be insufficient. Representatives of Cement Europe emphasised that they support the phased abolition of allowances only on condition that the CBAM reliably protects both imports and exports.

Criticism is also coming from other market participants and civil society organisations. The Business for CBAM coalition believes that the new proposals effectively penalise companies that have invested in ‘green’ technologies, whilst failing to provide protection for exporters. Meanwhile, the non-governmental organisation Bellona has warned that such moves by the European Commission undermine investor and trading partners’ confidence in the EU.

Pascal Canfen, a French MEP from the Renew Group and one of the leading architects of the CBAM legislation in the European Parliament, described the postponement of the phase-out of free allowances as an “inconsistent signal”, particularly against the backdrop of the EU’s plans to extend the carbon levy to new sectors.

As reported by GMK Center, the Italian association Confindustria emphasises the importance of rectifying certain ETS mechanisms which currently risk undermining the competitiveness of European industry, whilst not calling into question the decarbonisation targets.