Five EU states push Brussels to ease carbon costs for industry

Austria, Czechia, Hungary, Slovakia, and Poland are advocating for adjustments to the EU's carbon market to provide European industry with more time and flexibility to reduce emissions without sacrificing competitiveness, according to a document obtained by Euronews. The five countries contend that companies struggle to decarbonize factories while competing against producers outside Europe who are not subject to the same carbon price.

Austrian Industry and Energy Minister Wolfgang Hattmannsdorfer emphasized the urgency of the issue during a press conference on Thursday, stating that companies face significant costs when starting business overseas.

The appeal unfolded as EU industry ministers convened in Brussels to deliberate on the European Commission's proposed revision of the Emissions Trading System (ETS) and its potential impact on industry. Under the ETS, entities in carbon-intensive industries like steel, cement, and chemicals must purchase allowances for their emissions, with the cost increasing as emissions rise.

Hattmannsdorfer called for "economic patriotism" to retain industries and jobs within Europe, stressing that preserving European production is vital for regional prosperity, welfare, and environmental standards.

EU ministers have cautioned Brussels that industry requires incentives and flexibility to decarbonize, especially since factories already contend with high electricity costs. Businesses echo these concerns, arguing that if production becomes prohibitively expensive in Europe, they might relocate to other locations. Austria's central bank highlighted these pressures in late 2025, describing the nation's export industry as "under pressure on several fronts."

Weak German industry, US tariffs, high wages and energy costs, and increasing competition from China were all affecting exports. The situation has deteriorated further due to heightened energy costs resulting from the Iran conflict, exacerbating the challenges to Austria's and Europe's industrial competitiveness and green transition.

The five governments contend that factories should only be mandated to invest in substantial decarbonization efforts once fundamental conditions are met, such as affordable electricity, sufficient grid capacity, hydrogen supplies, and infrastructure for transporting and storing captured CO2. Removing safeguards against carbon costs prematurely could have the opposite effect, the document argues.

Companies might then relocate manufacturing operations to avoid carbon pricing. European industry is being asked to make multi-billion-euro investments in electrification, hydrogen, carbon capture and storage (CCS) or carbon capture and utilization (CCU), and new production processes. These investments necessitate low-cost electricity, functional grids, hydrogen availability, sufficient input materials, and adequate CO2 transport and storage infrastructure.

Alex Eggert, head of the steel trade body Eurofer, stated that the industry will achieve climate neutrality while producing in Europe. "We require an ETS that rewards early adopters while supporting the decarbonization of the entire industry. Withdrawing carbon leakage protection too hastily could undermine the very investments required for the transition," Eggert commented.