Industry representatives in Europe urged the institutions to act as the bloc faces high energy costs, rising inflation, and a surge in carbon prices alongside ongoing shortages of raw materials. They warn that current trends could herald another recession, with a notable impact on factories across steel, cement, refining, paper, chemical, and pharmaceutical sectors, as well as food and beverage producers. On the eve of a pivotal day for industries in regions like Asturias, it is noted that about 16 percent of European production facilities fall under the emissions trading system and many have faced closures between 2012 and 2021 because of the regulatory and market pressures.
Since yesterday, the European Parliament has been reviewing more than 600 amendments approved by the Environment Committee. The proposals aim to tighten the EU emissions trading regime by accelerating milestones toward 2030, eliminating free allocations sooner than the European Commission’s 2036 recommendation, and advancing the start of the gradual reduction schedule to 2026.
Although the final vote today remains uncertain, the mood in the chamber suggested openness. Members of Parliament are empowered to vote with significant freedom, and some are leaning toward the Environment Committee’s proposition. It remains unclear whether the most moderate timeline of 2036—advocated by some authorities—will be restored or adjusted further.
Most amendments favor ending free CO2 allowances for industries after 2030, with some proposals targeting 2032, 2034, or 2036 for the deadline. These ideas have been put forward and defended by individual MPs and by the Industry and Transport committees. Some voices call for a slower pace of reduction to allow sectors time to adapt, reflecting a belief that manufacturing industries can still align with Europe’s climate goals without destabilizing competitiveness.
There appears to be broad agreement on expanding the list of economic sectors protected by what is sometimes called a border adjustment mechanism. This approach would tax imports from countries whose producers do not bear the same costs of emission rights, with consideration given to mitigating the burden on Europe’s exports in markets where local producers face higher costs as well. The aim is to prevent a competitive disadvantage for European goods while encouraging global climate accountability.
Yesterday, the European Chamber largely supported the Environment Committee’s move to manage border regulation centrally through a European agency rather than leaving it to individual states, a shift intended to avoid intra-EU competition and arbitration disputes between governments. This centralization is viewed as a way to ensure consistent enforcement across the union.
Regarding the scope of the emissions system, the European Commission maintains that sectors such as domestic industry and transport must be integrated to penalize emissions. However, the Parliamentary Environment Committee suggests that only legal entities should be included, with exemptions for families but not for the self-employed and carriers, a distinction that could influence how the system impacts different constituencies.
The proposal contemplates a Social Climate Fund, funded by the revenue from emissions rights, to compensate affected sectors. Projections indicate a favorable distribution for Spain, which could receive a sizable share of the mobilized funds. This allocation would not be distributed through the European Commission as in other funds, but rather allocated directly through national or regional mechanisms as deemed appropriate.
Spanish sectoral associations—Unesid, Oficemen, Aspapel, FIAB, Feique, and AOP—emphasized yesterday the need for realistic CO2 targets and for maintaining free allocations at adequate levels to preserve fair competition. They urged the alignment of the Emissions Trading System with the Carbon Border Adjustment Mechanism, argued against introducing additional conditionalities, and pressed for effective measures to offset indirect carbon costs. They also warned against disproportionate effects from the Market Stability Reserve adjustments, seeking a stable transition that can protect jobs while advancing environmental goals.