Italy and Czechia are seeking a temporary slowdown in the reduction of free EU Emissions Trading System (EU ETS) allowances allocated to industries covered by the Carbon Border Adjustment Mechanism (CBAM).
A joint government paper, reported by CemNet on 5 October, calls for a pause in the withdrawal of free allowances, including allocations for cement producers. The document also proposes changes to sectoral benchmarks and the removal of allowances through the Market Stability Reserve (MSR).
Governments cite costs of industrial decarbonisation
The paper argues that decarbonisation technologies remain expensive or are not commercially available for some industrial sectors, providing the basis for temporarily slowing the reduction in free allocation.
Approximately 190 million allowances are scheduled for withdrawal between September 2026 and August 2027, according to the document.
The measures outlined by Italy and Czechia are proposals, not agreed changes to the EU carbon-market framework.
Cement sector faces competing carbon-cost pressures
For cement producers and other energy-intensive industries, the initiative highlights the interaction between carbon-price incentives and the cost of replacing existing production assets with lower-emission technologies.
Any changes to free allocation could also have implications beyond EU producers. International exporters will need to follow the negotiations because adjustments to European producers’ allocation of free allowances could influence competitive conditions and CBAM calculations.
The commercial impact will depend on the final measures and their interaction with existing EU legislation.
