European energy-intensive industries called in Brussels on 5 November for unconditional benchmark-based free emissions allowances and changes to how the EU Emissions Trading System (EU ETS) operates alongside the Carbon Border Adjustment Mechanism (CBAM). A joint industry position published on 4 November sets out the groups’ policy demands; it is not an adopted amendment.
The groups want benchmark-based allocation protected without additional investment conditions. They said manufacturers face high energy costs, global trade competition and carbon charges they cannot always recover through selling prices, and warned that further restrictions on free allocation could limit their ability to fund decarbonisation.
The position also calls for changes to the cross-sectoral correction factor, which can reduce free allowances for eligible installations when total demand exceeds the available allocation. Changes to free allocation would directly affect domestic production costs in steel, aluminium, cement and fertilisers.
CBAM is being introduced alongside the progressive reduction of free allowances in industries covered by the mechanism. The industry representatives seek effective protection against imports for European producers investing in cleaner technologies, as well as arrangements for exports and downstream manufacturers competing in markets where carbon prices may be lower.
The position calls for a durable solution for European exports, better industrial benchmarks and more emissions-trading revenue to be recycled into decarbonisation investment. The groups estimated that only 5% of emissions-trading revenues had gone back to energy-intensive industries, while noting that the estimate depends on how industrial support is classified.
The debate may affect future carbon-cost comparisons for exporters in Serbia and Montenegro and other non-EU markets. Changes in EU free allocation can alter benchmark adjustments relevant to CBAM, but domestic relief for EU producers does not automatically give foreign suppliers a corresponding exemption.
Until legislation changes, existing free-allocation and CBAM calculation rules remain applicable. The intervention strengthens the case for modelling alternative EU ETS reform scenarios separately from current-law import costs.
