Decarbonising European industry

The EU Emissions Trading System (EU ETS) is currently Europe’s only tool to decarbonise its industrial sectors, but it has so far failed at its task. Industrial emissions in Europe are stagnating, and no emission cuts are foreseen in the period up to 2030, or beyond.

The main problems are the numerous exemptions and the excessive handouts of free pollution permits to industries that have led to a situation where the biggest polluters are able to make profits from the system. Over the past years, the EU ETS has generated over 25 billion euros in windfall profits for private companies regulated by the system.

Full decarbonisation of the steel, cement and chemicals sectors is both necessary and feasible in order to meet the Paris climate goals and to enable a thriving industry in a climate-safe future. 

This requires a change in the current regulatory framework in which innovators struggle to get access to the market dominated by incumbents that are reluctant to change their profitable and highly-polluting business models. A full phase-out of the free allocation of pollution permits is a key priority.

In the context of the EU industrial strategy, Carbon Market Watch calls for measures to bring industry in line with the European Green Deal. These include a revision of the EU ETS to finally turn it into a tool that drives emission reductions from European heavy industry and ensures clean innovative technologies are supported.