Open letter by Energy Intensive Industries CEOs on ETS and CBAM

Industry’s climate neutrality transition pathways need a predictable and enabling policy framework rather than abrupt step changes

As leaders of energy intensive industries based in Europe, we are writing jointly to express our concerns over recent developments for the cornerstone policy of the Emissions Trading System (ETS) and the planned introduction of the Carbon Border Adjustment Mechanism (CBAM).

To be clear, we support the objectives of the European Green Deal and our companies are taking concrete actions across several technological pathways to deliver deep emission reductions and climate neutrality by 2050. The sectors within which we operate provide direct employment to around 2.6 million people and provide the interlinked foundations of strategic value chains for the EU economy and society.

Our businesses have to plan investments to deliver our energy transition, not only within the Single Market, but also within the global context where Europe’s climate ambition and carbon pricing is much stronger than other regions, whose industry we have to compete with.

Achieving the EU 2030 and 2050 climate change targets needs unprecedented investments, with a clear business case for every project. To deliver these, companies require a facilitating regulatory framework that provides a high degree of predictability and legal certainty, most notably in the following areas:

• Secure and competitive access to sustainable energy and feedstocks with a strong focus on increasing the independence from third-country supplies;
• Financing support to research, development and upscale of breakthrough technologies through a frontloading of financing for ready-to-go first-of-a-kind projects;
• Focus on material and technology neutral policies to develop lead markets for climate neutral products bridging the initial cost gap with conventional ones;
• Effective measures levelling the playing field with international competition where their home markets do not share the same climate ambition.

Legislation needs to accompany this transition with predictable measures and realistic timelines. Step changes risk overburdening companies before they can implement the necessary investments and develop the markets for low-carbon products. In this regard, latest proposals on ETS and CBAM weaken carbon leakage provisions, further increase unilateral regulatory costs and harm the competitiveness of European industries in EU or international markets.

Instead, higher climate ambition needs to be achieved cost-effectively and be accompanied by strengthened carbon leakage protection on EU and export markets against both direct and indirect carbon costs. This was also the primary rationale of the Green Deal – which we share – but the changed geopolitical environment and its impact on the cost base of industry have added to the urgency.

The overall objective should be to make Europe more attractive for investments that can secure high-quality jobs and contribute to a successful transition to climate neutrality.

Ahead of the final decisions on ETS and CBAM in the Environment Council and the Plenary of the European Parliament, we call on policymakers to consider these elements and urge you to support a coherent and realistic approach to climate protection and EU industrial leadership.