Don’t dismantle the ETS – make it deliver Europe’s net-zero industry

Europe’s industry is hurting – and the concerns are real

This week, energy-intensive industries put down a marker: Europe’s industrial base is under acute pressure, with high energy costs, rising carbon costs, and intensifying global trade disruption. Those concerns are real. Plant closures and investment postponements are not abstract policy problems, they are lived realities for workers, communities, and entire value chains.


But there is an ominous conclusion starting to circulate in Brussels: that the answer is to weaken the EU Emissions Trading System (ETS). That would be a profound mistake.

The ETS is delivering – weakening it would backfire

The ETS is not a “nice-to-have” add-on to Europe’s industrial strategy. It is one of the few policy instruments that has consistently delivered decarbonisation at scale. EU ETS emissions are now around 50% below 2005 levels, underscoring that the system has driven down the carbon footprint of the sectors it covers since it was introduced.

If we respond to today’s competitiveness crisis by hollowing out the ETS, we do not just delay decarbonisation. We delay industrial modernisation. And we send a signal to investors that Europe is willing to change the rules when pressure rises, exactly when we need long-term certainty to unlock capital for clean transformation.

"Europe’s long-term competitiveness will not be won by trying to make carbon constraints disappear on paper. It will be won by building the clean, resilient industrial system that the world is moving towards anyway. Staying the course on net zero, while investing hard in carbon removals and CCS, is not idealism. It is industrial realism." - Bergur Løkke Rasmussen, CCS Europe Director

Competitiveness starts with energy and infrastructure, not ETS rollback

 We cannot deny: many energy-intensive sectors in Europe face a cost squeeze, and carbon costs are part of that picture. But carbon pricing is not the root cause of Europe’s competitiveness challenge; and rolling it back is not the silver bullet.

The solution is rather to tackle all fundamental causes directly, including investment in clean energy and carbon removal technologies – not to dismantle the policy that is steering investment towards a net-zero economy.

CCS and carbon removals: the practical route for hard-to-abate sectors
That is where carbon capture and storage (CCS) and carbon removals come in. For hard-to-abate industries with process emissions, carbon capture technologies are indispensable to reach net-zero. For some sectors, they are not optional. They are the only viable route to deep decarbonisation while keeping production in Europe.
Europe has already set itself clear industrial objectives. The EU’s ambition to store 50 million tonnes of CO₂ annually by 2030 will require a massive roll-out of capture, transport, and storage projects. And yet we still face a reality where only a handful of CCS projects are operating in the EU, and first movers continue to struggle to reach financial close.

What policymakers should do now

If policymakers want to respond to industry’s fears without sacrificing Europe’s climate trajectory, there is a credible path: keep the ETS strong, and use it in synchrony with measures to drive investment in low carbon technologies.

That means, in practice:

  • Ringfence dedicated CCS funding in the Industrial Decarbonisation Bank and roll out Carbon Contracts for Difference (CCfDs) so industries can decarbonise through CO₂ capture with materially lower cost and bankable revenue certainty.
  • Use ETS revenues not only for grants/CCfDs, but also for de-risking – notably a Commission-backed first-loss guarantee programme for the full CCS value chain, modelled on InvestEU, to crowd in private capital and get first-mover projects to FID.
  • Get Member States to redirect ETS revenues towards CCS with clear climate benefit, including options like carbon quotas/tax exemptions or EU/MS-level insurance mechanisms, to accelerate early CO₂ transport infrastructure and scale the market.
Stay the course
Europe’s long-term competitiveness will not be won by trying to make carbon constraints disappear on paper. It will be won by building the clean, resilient industrial system that the world is moving towards anyway. Staying the course on net zero, while investing hard in carbon removals and CCS, is not idealism. It is industrial realism.

The ETS should not be watered down. It should be defended, and made to work better for the transition it was designed to deliver.
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By Bergur Løkke Rasmussen, CCS Europe Director