The European Commission is drafting a plan to increase free carbon emissions permits for heavy industries between 2026 and 2030. This proposal would include indirect emissions in permit assessments, a shift from the current focus on direct emissions only. Brussels aims to reduce compliance costs for industrial players to maintain economic competitiveness. The move could save affected industries approximately 4 billion euros in carbon costs.
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Including indirect emissions in free allocation is a massive shift. It basically subsidizes the electricity bill for heavy industry through the carbon market. This blurs the line between carbon pricing and general industrial support.
If companies get a 4 billion euro cushion, the urgency to invest in industrial heat pumps or electrification drops. Why pay for a retrofit when the permits are free?
The focus on indirect emissions suggests they are worried about the cost of green electricity for these plants. But permits don't fix the lack of transmission capacity to get that power to the sites.
Basically, the EU is blinking. They want the climate goals but are scared of industry moving outside the bloc. This is a classic competitiveness play.
True, but the document doesn't specify which sectors get the most. If it is just the biggest polluters, it does not help the smaller players trying to decarbonize.
