EU economy minister group call for ETS revision to prioritise competitiveness

The economy ministers of 21 EU member states have called for a number of measures aimed at strengthening competitiveness and reducing regulation for industry. In a joint statement, the signatories called for a simplification of regulations, measures to increase flexibility and improve overall competitiveness, with particular emphasis on revising the EU Emissions Trading System (ETS) and bolstering artificial intelligence (AI).

Hosted by German economy minister Katherina Reiche as part of the EU’s Friends of Industry initiative, the ministers’ meeting in Brussels built on last year’s Berlin Declaration, which underscored the need for a strong industry in Europe.

“Europe is at a turning point in industrial policy. In a phase of intensified global competition, the question now is whether we secure industrial value creation, innovation, and jobs in Europe, or whether we lose momentum through additional bureaucracy,” said Reiche. She called for simplifying regulations and consistently prioritising competitiveness. “This includes an innovation-friendly legal framework for industrial AI as well as an ETS revision that safeguards industrial value creation in Europe,” the German minister argued

Specifically, the paper calls for emission reduction in industry to be “as cost-efficient as possible.” The upcoming ETS revision therefore should “strive to support the competitiveness of European industry, and enhance investments in innovative technologies.”

The declaration further said that investments in “enabling conditions” for decarbonisation must be increased and stressed the need for targeted carbon leakage protection. The revision should therefore include “a pragmatic and investment-compatible approach to free allocation that fosters investments in climate-friendly technologies and is fully coherent with CBAM [the EU’s carbon border adjustment mechanism], while safeguarding the European industrial base.”

The ETS is the EU's flagship climate policy and puts a price on emitting planet-heating CO2. Under the current regime, industry must hold a permit to emit CO2. Most permits, also known as allowances, are auctioned, while a share is allocated free of charge to industry in international competition. The aim is to prevent companies from relocating production to countries with weaker climate policies to avoid high carbon costs.