The debate over the future of the European Emissions Trading System (EU ETS) is becoming increasingly heated. In recent months, some political voices, including the Italian government, have proposed suspending or relaxing the mechanism that regulates the pricing of CO₂ emissions in the European Union. The main argument is that the system would burden the competitiveness of European industry at a sensitive economic stage.
But while the political discussion is taking this direction, opposite signals are coming from the scientific and industrial worlds. After the letter signed by 150 Italian scientists and economists, the European business world has also decided to take public action to defend the system. In fact, more than 100 international companies and investors have sent an open letter to EU leaders calling for maintaining a strong and predictable carbon market.
Businesses call for stability
Signatories to the letter include large industrial and financial groups active in various sectors of the European economy: from steel to energy, from manufacturing to technology. Among the names are companies such as Volvo Cars, EDF, Ørsted, Tata Steel, Holcim, Heidelberg Materials, Vattenfall, SSAB, Salzgitter, and Ingka Group (Ikea), along with major investors and several cleantech startups.
The message coming from industry is quite clear: weakening the ETS would be counterproductive. According to the signatories, the European carbon market is one of the most effective tools for guiding investments in the energy transition and steering industrial strategies toward low-emission technologies.
Businesses also stress that it is precisely the stability of the rules that is one of the most important elements for those who have to plan industrial investments over long-term horizons. Changing the rules of the system or suspending it would risk generating uncertainty and slowing down innovation processes that have already begun.
A question of competitiveness and energy security
In the letter sent to European heads of state and government, the companies explicitly link the future of the ETS to a broader issue: the economic and industrial security of Europe. According to the signatories, the continent’s competitiveness depends not on slowing the climate transition but on the ability to build a more stable energy system that is less dependent on fossil fuel imports.
In recent years, geopolitical tensions and volatile energy markets have shown how exposed Europe is to fluctuations in gas and oil prices. In this context, companies argue, focusing on clean energy, technological innovation and industry decarbonization is also a strategy for economic autonomy.
“A misdiagnosis of the problem.”
One of the most significant passages in the letter concerns precisely the analysis of European industrial difficulties. According to the signatories, the policy debate is in danger of focusing on the wrong target. In fact, the real causes of European industry’s competitive difficulties would be others: energy prices linked to fossil fuels, global overcapacity in some industries, and imperfections in the European single market.
This is why businesses call proposals to suspend or modify the ETS a “gross misdiagnosis of the problem.” Indeed, intervening in the carbon market would risk diverting attention from the structural reforms needed to strengthen the European economy.
The node of investment in the transition
Another central issue concerns the use of revenues generated by the ETS. Companies are calling for these resources to be used strategically to accelerate industrial transformation and support the development of clean technologies.
Among the proposals made are strengthening investment in renewable energy, power grid development, storage systems and energy efficiency technologies. The companies also suggest using a portion of ETS revenues to support long-term contracts for the supply of renewable energy to industries to ensure more stable and predictable prices.
Another priority is to strengthen European innovation support instruments, such as the Innovation Fund and the Modernization Fund, which finance low-emission industrial projects.
The link with CBAM
Another central instrument of European climate policy also enters the debate: the CBAM, the border carbon adjustment mechanism. This system introduces a CO₂ price even for some products imported into the European Union, with the aim of preventing so-called carbon leakage, i.e., the displacement of production to countries with less stringent environmental rules.
According to the signatories of the letter, ETS and CBAM should be seen as two complementary pillars of the European industrial strategy. Weakening one of these instruments would risk undermining the effectiveness of the entire system.
A signal in the European debate
Business intervention is a significant element in the European political debate on the future of climate policies. While some political forces are calling for slowing down or revising some of the instruments of the energy transition, a growing part of industry seems to be calling for exactly the opposite: clearer rules, regulatory stability and a strengthening of decarbonization policies.
The discussion remains open and is likely to continue in the coming weeks, even as European leaders discuss the future of the continent’s industrial competitiveness.
But one message emerges strongly from the companies’ letter: for an important part of European industry, the carbon market is not an obstacle to economic growth. On the contrary, it represents one of the key tools for driving the transformation of the economy towards a more innovative, resilient and less fossil fuel dependent model.
