Weakening the emissions trading system does not improve Europe’s competitiveness

From the reader. The EU’s 90 percent emission reduction goal for 2040 can only be achieved with the help of the emissions trading system.

Since 2005, the emissions trading system has already channeled more than 110 billion euros into investments for the green transition by setting a clear cost for emissions.

In energy-intensive industries, the credibility of the emissions trading system depends on a clear, predictable and irreversible reduction of free emission rights.

Long-term predictability determines whether investments in a cleaner and more competitive European economy will be realized quickly enough.

Dependence on fossil fuels would increase

If this elimination of free distribution is slowed down, there is a danger that the importance of the price of coal will be obscured precisely at the critical moment, when companies make the final investment decisions on electrification and new low-emission technologies.

The decision would penalize early adopters and reward companies that don’t invest – the exact opposite of what a functioning carbon market should do.

Weaning off coal is inevitable due to climate and industrial resilience. Either Europe is a pioneer of change and responsible production, or production moves to regions where costs are lower and the carbon footprint is much larger than in Europe.

In the Nordic countries, steel industry investments in low-emission technologies and production modernization are underway thanks to the EU’s ambitious and predictable climate policy. Without this, investment and change will stop.

The challenges of the EU’s competitiveness must be examined honestly. They are not caused by climate policy or the price of emissions, but by structural dependence on fossil energy. Weakening emissions trading will not help – on the contrary, dependence on fossil fuels would increase.

The key is a predictable emissions trading system and an efficient carbon limit mechanism, combined with a gradual waiving of free emission rights and a functioning export model. The price of coal is a message that phasing out of coal supports competitiveness and growth.

A message you can’t afford

The EU must recognize global realities. The steel market is distorted by overcapacity, state subsidies and large carbon dioxide emissions. Europe cannot allow these to undermine its transition.

An agreement has been reached on the EU’s new steel protection measures, and they are an invaluable tool in maintaining fair competition and the EU’s industrial strategy.

At the same time, the EU must invest in the green transition and create a strong market for low-emission materials. Without measures affecting demand – public procurement, clear definitions and product labels – pioneers will not be rewarded or investment attracted.

The EU has already made a strategic choice in which climate leadership is combined with strong industry. Investments are underway, technologies exist and markets are emerging.

Deviation from the agreed direction would signal that the EU’s long-term climate and industrial policy can be negotiated – and that is a message that Finland and the EU cannot afford.

Kati ter Horst

CEO, Outokumpu

Johnny Sjostrom

CEO, SSAB