Key facts
- The EPP has called for more free pollution allowances under the EU's Emissions Trading System (ETS) for heavy industry beyond 2030.
- The party argues this is crucial for maintaining industrial competitiveness and ensuring a sustainable decarbonisation pathway.
- The European Commission is expected to propose revisions to the ETS rules on July 15.
- Some European steelmakers are actively lobbying against weakening the ETS, citing concerns about investment certainty and penalizing early movers.
- A recent poll suggests that 72% of European adults support the 'polluter pays' principle underpinning the ETS.
The European People's Party (EPP) is advocating for significant adjustments to the European Union's Emissions Trading System (ETS), proposing an increase in free pollution allowances for heavy industry beyond 2030. This push comes ahead of a crucial European Commission proposal to revise the ETS rules, expected on July 15.
The EPP, which includes Commission President Ursula von der Leyen's party, argues that protecting Europe's manufacturing base is as vital as reducing emissions. Their internal document suggests lowering the Linear Reduction Factor, which dictates the annual decrease in available ETS allowances, and extending free allocations beyond 2030 for sectors facing international competition with weaker climate regulations.
The party supports the Commission's existing proposal to continue free allowances for industry between 2026 and 2030, covering approximately 75% of emissions, but seeks to go further. EPP President Manfred Weber stated that the EU cannot "kill its industry due to climate change." This position has garnered support from some EU countries and industry groups, prompting reconsideration of planned reductions in polluting permits for heavy industry.
However, the proposed changes face opposition. Several European steelmakers, including ArcelorMittal, thyssenkrupp, and voestalpine, are lobbying to maintain the ETS's integrity. They argue that weakening the system would undermine investment certainty, penalize early adopters of green technologies, and delay necessary industrial transformation. These companies, along with watchdog SteelWatch, point out that significant free allowances received have not been matched by comparable investments in decarbonisation.
Conversely, a poll commissioned by the civil society network Beyond Fossil Fuels indicates broad public support across six European countries for the "polluter pays" principle. The survey found that 72% of European adults believe companies emitting the most or failing to reduce emissions should pay more. Environmental advocates like Climate Action Network Europe argue that continuing to grant free allowances without stringent conditions will not prevent industrial decline and may even hinder genuine transition efforts.