German Chemical Industry Calls for Review of Emissions Trading System

German Chemical Sector Pressures Government Ahead of Emissions Trading Review

The German chemical industry is intensifying its pressure on Chancellor Friedrich Merz as the European Union prepares for a comprehensive review of its emissions trading system. This push comes amid concerns that new amendments could impose significant financial burdens on companies, potentially harming their competitive edge.

Warnings About the Impact of New Amendments

In a letter addressed to Chancellor Merz, Markus Steilemann, President of the German Chemical Industry Association, highlighted that the new requirements for allocating free emission certificates exceed the economy’s capacity to adapt. He warned that these amendments “significantly increase investment risks and weaken Germany’s and Europe’s economic position.” The letter, which was reviewed by the German Press Agency, indicates that the European Commission’s proposed amendments from May offer limited improvements. However, they do not provide substantial relief for the chemical sector, which may face additional costs amounting to hundreds of millions of euros annually.

Concerns Over Retroactive Burdens

Industry lobby groups have voiced concerns regarding the retroactive allocation of free certificates for the period from 2026 to 2030. This requirement compels companies to make swift financial decisions, adding pressure to an industry that is still negotiating the fundamental rules of the system. The association points out the absence of essential conditions for a successful green transition, which include:

• Adequate connectivity networks.
• Competitive electricity and hydrogen prices.
• Effective infrastructure for hydrogen and carbon dioxide.

Steilemann urged Chancellor Merz to intervene with the European Commission to suspend the new tightening measures, emphasizing that the sector is already grappling with a severe crisis and soaring energy costs.

Emissions Trading System as a Climate Tool

The emissions trading system serves as the EU’s primary tool for achieving climate neutrality by 2050. Companies must possess rights to emit harmful gases, which they can trade as needed. Consequently, the number of available certificates gradually decreases, raising pollution costs and encouraging emission reductions. The European Commission plans to conduct a fundamental review of the system this summer, with final proposals expected in July. Germany supports only limited amendments, particularly concerning the mechanism for determining free certificates for industrial facilities.

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