More than 100 businesses tell EU leaders strong carbon market vital to Europe’s sovereignty and security
Pascale Palmer, Director of Media
Businesses, innovators and investors across Europe’s heavy industry, manufacturing, retail, energy and technology sectors have called on EU leaders to maintain a strong and predictable EU carbon market, warning that proposals to weaken the EU Emissions Trading System (ETS) are “a serious misdiagnosis of the problem”.
In an open letter, 102 companies and investors including Tata Steel, Volvo Cars, EDF, Ørsted, Heidelberg Materials, Vattenfall, Holcim, SSAB, Salzgitter, Ingka Group|IKEA, Nordea Asset Management, Outokumpu, VELUX and Novonesis – as well as leading Cleantech innovators including Cylib, Reverion, Sunfire, Gravithy, Stegra, CorPower Ocean and Rondo Energy – urge European leaders to reaffirm their commitment to the EU ETS ahead of the European Council meeting next week, highlighting its importance to EU security and sovereignty.
The letter states: “In the current geopolitical context, Europe’s security and sovereignty hinge on building a more competitive and resilient economy, moving away from volatile fossil imports towards capitalising on our clean energy potential, highly educated workforce and strength in innovation […] In our view a robust EU ETS is critical to achieving this.”
Coordinated by Business for CBAM Coalition, CleanTech for Europe, CLG Europe and We Mean Business Coalition, and addressed to EU Heads of State and Government, the letter warns that weakening the ETS would distract from the real drivers of Europe’s competitiveness challenge.
It states: “[…] calls have grown louder to ease pressure on energy intensive companies in the name of competitiveness. However instead of focusing on the structural causes of economic erosion – higher energy prices set by fossil fuels, unfair competition stemming from global overcapacity in certain sectors, insufficient integration of the single market – discussions have been misdirected towards amending or even suspending the EU ETS. This would be a serious misdiagnosis of the problem.”
Signatories urge the European Council to adopt a clear statement at its upcoming meeting that removes any ambiguity about Europe’s path towards energy security, competitiveness and decarbonisation, while emphasising the need for a coordinated EU-wide response to shared challenges in the spirit of the single market.
Maria Mendiluce, CEO, We Mean Business Coalition, said: “Europe’s carbon market is not a burden on industry, it is one of the most powerful tools Europe has to drive investment, innovation and industrial competitiveness. Businesses need stability and clear signals. Weakening the ETS would undermine confidence at precisely the moment Europe needs to scale investment in clean industry, as geopolitical tensions once again illustrate the volatility of fossil fuel markets.”
Victor van Hoorn, Director, Cleantech for Europe said: “Weakening the ETS now, at a time when unfolding geopolitical events yet again display Europe’s need to decarbonise rapidly for its security and sovereignty, would be incredibly shortsighted. But we need a very serious discussion on the strategic deployment of ETS revenues, particularly by Member States, to bolster the business case for industry to decarbonise. That will create an unprecedented opportunity to partner with innovators and scale critical clean technologies.”
Ursula Woodburn, Director, CLG Europe said: “A strong and well-designed EU ETS, combined with targeted industrial support, is essential to ensure Europe remains industrially competitive. Scrapping or weakening the ETS, on the other hand, would delay decarbonisation, undermine investment, and risk Europe’s long-term economic resilience – especially at a time when major global competitors are moving ahead with their own carbon pricing schemes.”
Leon de Graaf, Acting President, Business for CBAM Coalition said: “This letter provides an important counter-voice to those that want to weaken the EU ETS and the CBAM. What some don’t yet realise is that many billions have already been invested based on the assumption that both instruments are not watered down. We are not tone-deaf to the worries of heavy industry, which is why we propose certain policies can be strengthened. But at the end of the day, the EU ETS and CBAM make a lot of business sense, and their current trajectories are crucial for investment certainty.”
The letter highlights key elements required to ensure a competitive EU industry and an effective use of EU ETS revenues, including:
- Continuing the deployment of abundant, firmand affordable clean power, paired with long term investments in grids, flexibility, efficiency and storage to enable electrification at scale.
- Assessing near term options to support industry, which could include using Member States ETS revenues to support long-term clean industrial Power Purchase Agreements (PPAs) to provide sufficient predictability for capex heavy industrial decarbonisation investments. This could also involve removing impediments for industrial companies to co-locate onsite clean energy generation, batteriesand thermal storage ahead of grid expansion, and accelerating connection to the electricity grid.
- Ensuring that the CBAM functions effectively and, where justified, is extended to prevent carbon leakage in the value chain and additionalsectors.
- Ensuring that ETS revenues, the Innovation Fund and Modernisation Fund are effectively disbursed towards scaling up clean technologies.