European industry calls for changes to carbon reform to avoid more factory closures

European Industries Warn EU Carbon Market Reform May Cause Factory Closures

Concerns Over EU Carbon Market Reform and Its Impact on European Industry

Industry Warnings and Joint Letter Highlights

FRANKFURT, Nov 5 (Reuters) - More than 100 European companies have warned that proposed reforms of the EU carbon market could sharply raise costs for energy-intensive industries before they have the means to decarbonise, threatening investment and production in Europe.

A joint letter seen by Reuters underscores mounting concern over the cost of Europe's green transition as manufacturers grapple with high energy prices and global competition.

Key Signatories and Statements

• Signatories include Covestro, Evonik, Wacker Chemie, Voestalpine and Thyssenkrupp's steel division

• "Europe's energy-intensive industries face intense competitive pressure, high energy costs, and an increasingly difficult investment environment. Yet our common objective is clear: we want to decarbonise, invest and continue producing in Europe," the letter states

Details of the Proposed Reform

Emissions Trading Scheme Overhaul

• The European Commission in July proposed an overhaul of the Emissions Trading Scheme, a key tool to cut emissions by forcing companies to buy permits for CO2 they emit

• The EU Parliament is to vote on the reform in December

Market and Analyst Reactions

• Analysts have raised their forecasts for prices in the European Union's carbon market, a survey showed last week

Industry Response and Recommendations

Investment Readiness and Policy Requirements

• "We are ready to make the investments required for the transition. Still, Europe must provide the conditions to make them possible and competitive, including globally competitive energy prices, infrastructure, and demand for low-carbon products. The Commission's ETS proposal cannot provide such a framework on its own," it added

Potential Consequences of Unchanged Reform

• Unchanged, the reform could "increase costs and accelerate production closures or relocation", the letter says

Opposition to Free Allowance Conditions

• The companies reject plans to make free CO2 allowances only available to companies that commit to decarbonisation investments in Europe, calling instead for fairer benchmarks

Reporting Credits

(Reporting by Christoph Steitz; Editing by Alexander Smith)