Six European Union member states have escalated their opposition to the bloc’s carbon market, warning that tighter pollution costs could push heavy industry to relocate outside the EU. At a meeting of industry ministers in Brussels on Thursday, Bulgaria, the Czech Republic, Greece, Poland, Romania, and Slovakia argued that the planned reduction in free emissions allowances under the EU Emissions Trading System (ETS) is too aggressive.
The core of the dispute is the European Commission’s proposal, announced on 11 May, to sharply reduce free carbon permits for sectors such as steel, cement, chemicals, and aluminium between 2026 and 2030. In some cases, the cuts could reach 50% compared with the previous decade. Ministers described the news as a “disappointment.”
Industry Squeezed by Energy Costs and Geopolitical Turmoil
The six countries issued a joint document, seen by Euronews, arguing that the EU is demanding decarbonisation faster than technology allows. Many heavy industries still rely on fossil-fuel heat because affordable alternatives either do not exist at scale or remain commercially unviable. The document drew support from Italy and Austria, who had already been calling for a suspension of the ETS before the US-led war against Iran further exacerbated rising energy prices in Europe.
Italian Minister for Industry Adolfo Urso told his counterparts that the situation for Italian industry was untenable even before the conflict in the Middle East. “It would have been necessary to do something before the war. We don’t know how it’s going to end. It was necessary then, it’s even more necessary now to deal with the situation,” Urso said.
Austrian Federal Economy and Energy Minister Wolfgang Hattmannsdorfer echoed those concerns, noting that steel producers will need to invest between €1 billion and €2 billion in decarbonisation over the next five years. “The free ETS certificates need to be extended because the system is increasingly becoming a competitive disadvantage for our European industry,” Hattmannsdorfer said.
Proposal for a More Gradual Transition
Rather than rejecting climate policy outright, the wary ministers propose a slower, more pragmatic transition. They call for a temporary freeze of benchmark values at current levels and a redesign of the methodology to account for actual production capacity and realistic energy mixes. This approach, they argue, would prevent carbon leakage—where production moves to countries with weaker environmental rules—while still encouraging decarbonisation over time.
The backlash comes amid broader tensions over energy costs and geopolitical instability. As Magyar's Brussels visit highlighted, the EU’s energy crisis remains a pressing issue, with member states divided over how to balance climate goals with industrial competitiveness. Meanwhile, Meloni has turned up the heat on Brussels for fiscal relief as energy costs bite in Italy.
Responding to the ministers’ concerns, Industry Commissioner Stephane Séjourné suggested that the Commission is inclined to propose tailoring free allocations to industry sectors as part of the upcoming revision of the ETS. This signals a possible compromise, but the six countries remain wary of further delays.
The debate underscores a fundamental tension within the EU: how to maintain its climate leadership without undermining the competitiveness of its industrial base. As the bloc faces pressure from both the US and China on green technology, the outcome of this dispute will have significant implications for Europe’s economic future. The issue is also likely to feature prominently in discussions around Hungary’s new PM heading to Brussels to reset ties and unlock frozen funds.
