EU Emissions Trading System faces scrutiny over industrial competitiveness

The European Union's Emissions Trading System (ETS) is facing increasing scrutiny from industry leaders and policymakers regarding its impact on economic competitiveness and deindustrialization.

In the European Parliament, MEP Anna Maria Cisint has raised concerns that the ETS is imposing rising costs on European businesses. Key issues cited include high CO2 price volatility, increased participation by financial speculators, and the phase-out of free emission allowances for sectors exposed to international competition. There are also concerns that extending the ETS to maritime transport could drive traffic toward non-EU ports due to a lack of competitive alternative fuels.

Simultaneously, the International Air Transport Association (IATA) is urging the EU to limit the expansion of the ETS and reduce regulatory burdens. IATA reports that regulatory costs reached approximately 9.9 billion euros in 2024, with projections suggesting they could rise to 33 billion euros annually by 2050. The association advocates for prioritizing the global CORSIA mechanism over unilateral ETS expansion on international routes and calls for more support to meet Sustainable Aviation Fuel (SAF) mandates, noting that high fuel costs are already impacting airline profit margins.