Around 40 industrial companies have warned the European Union that rising carbon costs are threatening the continent's industrial base.
The firms urged "decisive intervention" to stop the "escalation of costs" in the Emissions Trading System (ETS) in a letter to European Council President António Costa and European Commission President Ursula von der Leyen.
If the current system remains unchanged, production will be shifted abroad and factories will be forced to close, the signatories said. They include chemical groups BASF, Evonik and Covestro, as well as steelmakers Thyssenkrupp and ArcelorMittal.
The Emissions Trading System is the EU's flagship climate policy tool and a central pillar of its goal to achieve climate neutrality by 2050. Companies covered by the scheme must hold permits for their carbon dioxide emissions, creating a financial incentive to cut greenhouse gases. As the number of available permits declines over time, the carbon price rises.
Pressure has been mounting from industry and some political leaders to soften the system in order to reduce costs for businesses. The European Commission is due to present proposals for a major revision of the ETS in July.
In the letter seen by dpa on Wednesday, the companies argue that the ETS no longer reflects global economic realities, saying Europe is imposing rapidly rising carbon costs on industries already burdened by high energy prices and regulation.
The signatories also argued that key conditions for industrial decarbonization are not yet in place, citing a lack of functioning hydrogen and carbon dioxide infrastructure and weak demand for low-carbon products.
However, industry remains divided over the issue. While Thyssenkrupp and ArcelorMittal are calling for a loosening of the ETS, other companies that have already invested heavily in low-carbon production, such as German steelmaker Saarstahl, fear they could be disadvantaged by any weakening of the system.
Germany's influential IG Metall union, which recently mobilized thousands of steelworkers at protests in Berlin, has also warned against rolling back the transition to climate-neutral production, arguing that doing so could put "tens of thousands of jobs" at risk.
