EU Carbon Market Reform Faces a Dilemma: 12 Countries Protest Carbon Price Impact on Livelihoods—Is Climate Ambition Yielding to Fairness?

The EU Emissions Trading System (EU ETS), the world’s largest carbon market, has covered sectors including power generation, steel, and chemicals since its launch in 2005, driving emissions reductions through allowance auctions and trading. The 2023 European Climate Law raised the 2030 emissions reduction target to 55% (compared to 1990 levels) and launched Phase II reform (ETS2) in 2025—marking the first time that end-use sectors such as building heating and road transport are brought under carbon pricing. ETS2 is expected to cover 40% of the EU’s greenhouse gas emissions. However, the reform has triggered intense controversy among member states. In June 2025, Austria, Belgium, Italy, and ten other countries jointly submitted a policy recommendation to the European Commission, warning that surging carbon prices could trigger sharp energy price hikes and exacerbate household financial burdens. Eastern European countries—including Poland and the Czech Republic—strongly oppose the reform, citing their fossil-fuel-dependent industrial structures; rising carbon prices directly threaten key industries like steel and cement. The Livelihood Anxiety Behind the 12-Nation Protest ETS2 represents a fundamental shift in carbon pricing logic—from “corporate responsibility” to “shared societal burden.” According to EU estimates, ETS2 implementation will transmit carbon costs from wholesale fuel markets to end-user prices. In Germany, for example, gasoline prices for transport are projected to rise by approximately €0.20 per liter, and diesel by €0.25 per liter; annual natural gas bills for households will increase by €300–€500, and heating oil users will face hikes of €400–€600. Although the EU has introduced a transitional clause returning 75% of revenues to citizens over the first three years, Austria’s Ministry of Finance modeling shows that if carbon prices reach €80 per ton in 2026, household energy expenditure as a share of income in southern rural regions would surge from the current 6.8% to 11.3%—far exceeding the EU’s 8% “affordable energy” threshold. Italy’s Ministry of the Environment internal documents indicate that household energy poverty rates in southern regions—including Sicily and Calabria—have already reached 27%; ETS2 could push this figure beyond 35%. Belgium’s Energy Minister warned: “We support carbon pricing—but we cannot accept low-income households footing the bill for climate transition.” This concern is not unfounded: the 2022 French ‘Yellow Vest’ movement remains a stark reminder—when carbon tax hikes caused diesel prices to jump 15%, it sparked months of sustained street protests. Moreover, cascading effects from supply-chain cost restructuring have also delivered economic shocks. Austria’s Institute for Economic Research estimates ETS2 will raise transport sector costs by 12–15%, squeezing profit margins for small- and medium-sized logistics firms to below 2%. More seriously, divergent carbon prices across the EU risk triggering “carbon leakage,” undermining industrial competitiveness. If you’d like to learn more about sustainable development and China’s dual-carbon goals—and seize related opportunities—I recommend enrolling in my essential course for entering the dual-carbon field. This course thoroughly explains topics including: What are the dual-carbon goals? What opportunities does the dual-carbon industry offer? How can one enter this field? It covers a broad range of themes, and includes a comprehensive collection of dual-carbon resources—such as the Dual-Carbon Handbook, the Carbon Neutrality White Paper, summaries of dual-carbon welfare and subsidy policies, and research reports on carbon footprint and carbon accounting. All materials are available for free download!

Europe’s Chemical Industry’s ‘Self-Rescue Plan’: Major Chemical Companies Say It’s ‘Too Little, Too Late, and Largely Ineffective’

It aims to rescue Europe’s chemical industry—which is undergoing ‘systemic collapse’—and could save the sector at least $420 million annually. Yet major European chemical companies and industry associations widely believe these measures cannot halt the ongoing wave of plant closures. Tom Crotty, Director of Corporate Affairs at UK chemical giant INEOS Group, stated bluntly: “The Chemicals Action Plan is too little, too late—and fails to address the real issues. Competitors in the U.S. and China have already seized the keys to Europe’s industrial foundations. While Europe remains stuck in talk, the U.S. and China have long taken concrete action—this is precisely why capital, innovation, and jobs are being bundled and relocated overseas.” Crotty argues the plan fails to tackle the two most urgent threats to Europe’s chemical industry: high natural gas prices and soaring carbon allowance costs. Richard John Carter, independent advisor to BASF and former senior executive, believes the EU’s two most effective tools—tariffs and carbon allowances—must be implemented immediately. Measures outlined in the plan—such as affordable energy, decarbonization, and innovation—will take many years to materialize. European chemical associations remain broadly skeptical whether this plan can enhance the industry’s global competitiveness. Markus Steilemann, CEO of Germany’s largest chemical association VCI, told media: “We’ve taken the first step—but over the coming months, we’ll need to see whether these measures can be effectively implemented.” Peter Hart of consulting firm Horváth & Partner notes that Germany’s chemical industry suffers the greatest impact from high natural gas and electricity prices, as well as carbon allowance costs. The EU’s action plan cannot bridge the actual competitiveness gap facing Germany’s chemical industry on the global stage. The European Chemical Industry Council (Cefic) states that this action plan is merely one of several conditions required for the survival of Europe’s chemical industry. Cefic Director General Marco Mensink emphasizes that, beyond the measures already adopted, clear policies are urgently needed on plastic recycling, green hydrogen, critical chemicals, and natural gas pricing. The EU has repeatedly pledged support for the chemical industry—but so far, all such support measures have yielded negligible results. Cefic estimates that around 5% of Europe’s chemical production capacity was forced offline in 2023 due to competitiveness deficits; even more plants were shuttered in 2024, and numerous additional closures are planned for 2025. Europe’s chemical industry believes the true path forward lies in the policy reform proposal released in February 2024—the Antwerp Declaration. Cefic states: “The solution is already before us: the Antwerp Declaration.” The Antwerp Declaration is a landmark document formally submitted to the European Commission in February 2024 by 73 European industrial leaders in Antwerp, Belgium. Its full title is the Antwerp Declaration for a European Industrial Deal.

EPCA: EU ETS Redesign 'Potentially Toxic' for European Petrochemicals — BASF CEO

2 days ago

BASF CEO Markus Kamieth states that the EU Commission's proposed ETS redesign risks permanent closure of CO2-intensive petrochemical plants in Europe. He warns this could lead to increased imports from abroad due to competitiveness issues.

chemweek

2026-08-03

Europe Top Stories: Weekly Summary

2026-10-09

EPCA: EU ETS Redesign 'Potentially Toxic' for European Petrochemicals — BASF CEO

EPCA: EU ETS Redesign 'Potentially Toxic' for European Petrochemicals — BASF CEO

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