EU Moves to Cut Carbon Costs for Heavy Industry

EU member states backed a proposal on Wednesday to give heavy industry more free carbon allowances in an effort to help European manufacturers remain competitive.

Under the proposal, industry would receive an additional 121m free emissions allowances between 2026 and 2030. The amount allocated to individual companies would depend partly on their heat production and fuel consumption.

According to Reuters calculations, the additional allowances could save companies around €8.25bn ($9.8bn) in emissions costs. Industry would receive more free allowances than originally proposed by the European Commission.

The measure would primarily benefit sectors including chemicals, metal processing, ceramics and glass manufacturing.

Under the EU Emissions Trading System (ETS), large industrial companies must surrender allowances for the carbon dioxide they emit. Some allowances are allocated free of charge to industries exposed to international competition, reducing the risk that production moves to countries with weaker climate rules.

The proposal would temporarily increase those free allocations even as the EU gradually reduces the overall supply of allowances in an effort to cut emissions.

Member states will now begin negotiations with the European Parliament on the final rules, with the aim of reaching an agreement before the end of the year. The EU is also negotiating a broader overhaul of its emissions trading system, with an agreement targeted for 2027.

(Reuters, bak)