The European Commission is preparing to give additional free carbon allowances to energy-intensive industries like chemicals and refineries, retroactive to January 2026. The move follows pressure from member states including Italy, Poland, and the Czech Republic, who argue that high energy prices and global competition make it harder for European manufacturers to comply with the EU Emissions Trading System (ETS). This concession is separate from the broader ETS review expected in July. It signals that competitiveness concerns are gaining ground inside Brussels climate policy. The risk is that temporary relief for industry becomes hard to reverse, potentially weakening the carbon price signal the ETS is meant to create. The article examines the tension between maintaining climate targets and preserving industrial capacity in Europe. It notes that the Carbon Border Adjustment Mechanism (CBAM) is not yet fully operational, leaving free allowances as a key buffer. The outcome of the upcoming ETS review will determine whether the EU can balance emissions reduction with a realistic path for heavy industry to stay in Europe.
