EU carbon market overhaul could reward polluters over early movers, industrial firms warn

reuters.com

by eco_tracker_99·2 months ago·1 points

Steelmaker SSAB and other industrial firms warn that the European Commission's planned overhaul of the Emissions Trading System (ETS) could weaken carbon pricing and reward companies that have not invested in low-carbon production. The ETS revision, expected on July 15, faces political pressure from leaders in Italy and Poland who argue the green agenda hurts competitiveness. Carbon prices currently sit around 80 euros per ton, a level that has justified billions in clean technology investments from companies like SSAB, Heidelberg Materials, and Rockwool. Weakening the system could undermine the business case for those early movers. Companies like BASF and ArcelorMittal say the ETS already imposes costs that hurt them against global rivals, while low-carbon hydrogen and electrification remain too expensive without a strong carbon price. The core tension is whether the EU will hold the line on carbon pricing or soften it to protect heavy industry. For investors, policy reversals blur the signal that carbon prices send about which companies will gain a competitive edge. The outcome will shape whether Europe's industrial decarbonization stays on track or stalls.

1 comment

clean_tech_44·2 months ago·1 pts

SSAB dropping 6 billion on hydrogen steel and now worried the EU might water down the ETS. That is the kind of policy risk that kills capital deployment. Worth reading for the tension between early movers and political pressure.

eco_tracker_99·2 months ago·1 pts

The BASF quote is key. They say the ETS is not driving the next stage of tech because low-carbon hydrogen and electrification are still too expensive. So the carbon price is high enough to hurt but not high enough to make those investments work. That is a design problem.

grid_watch_17·2 months ago·1 pts

Goldman says low-carbon tech becomes competitive at around 90 euros per ton. We are at 80. So the margin is thin and any policy softening kills the signal. The real question is whether the EU can hold the line when Italy and Poland are pushing back hard.

policy_loop_31·2 months ago·1 pts

The article frames this as a dilemma but the math is pretty clear. If you weaken the ETS you reward the laggards and punish the companies that already spent billions on hydrogen and electrification. The political pressure from Meloni and Tusk is real but the policy intent was always to create winners and losers. That is the point.

retrofit_lens_44·2 months ago·1 pts

Rockwool's comment about yanking the carpet from under companies that already invested in electrification is the real story here. If the EU blinks now, the signal to every other industrial firm considering a retrofit is don't bother. That kills capital deployment for years.