Dear President von der Leyen,
Dear Executive Vice-Presidents Séjourné and Ribera,
Dear Commissioners Hoekstra and Jørgensen,

The co-signatories of this letter see the Carbon Border Adjustment Mechanism (CBAM) and the EU Emission Trading System (EU ETS) as the foundation for the clean industrial transition in Europe. Companies are already making major capital decisions on the basis of these signals. Deregulating CBAM at this point will be detrimental for their business case. Technologies such as renewable hydrogen, low-carbon cement, CCS solutions, and clean iron and steel all depend on a strong CO₂ price to scale.

A solid CBAM also strengthens the EU’s role in stimulating much-needed global climate action. Since the European Commission announced CBAM in 2021, major economies representing more than 40% of global greenhouse gas emissions have announced that they will include industry under their respective emission trading schemes. This would not have happened without pressure from the EU’s CBAM.

While there are outstanding issues around the CBAM related to anti-circumvention, export carbon leakage and downstream product expansion, this should not be a reason to postpone the CBAM’s financial entry into force or the phase out of EU ETS free allocation.

Given the new global realities that have serious implications for Europe’s competitiveness, we trust that these outstanding issues will be urgently addressed by the European Commission and the other EU institutions, including the urgently needed implementing regulations such as the CBAM benchmarks.

Deregulation is also not needed, since CBAM will hardly impact the phase out of EU ETS free allocation in the first two years – only 2.5% in 2026 and 5% in 2027. Furthermore, the EU ETS Directive under Article 10a already includes provisions for the free allocation to be potentially mitigated in case CBAM does not provide enough protection against carbon leakage.

We therefore urge you to stay the course on the CBAM and the EU ETS.

Industrial support for the CBAM and EU ETS can be improved if the Commission ensures that the enabling conditions for industry to decarbonise are in place, such as access to abundant and affordable clean electricity, as well as reliable timelines for hydrogen infrastructure buildout. While there are plans to improve power production capacity, grid capacity and interconnections, they will still take time to come online. Until that happens, industry urgently needs more effective short-term support to reduce the cost of electricity.

We therefore encourage the Commission to make effective proposals in this regard, while at the same time staying the course on the CBAM and the EU ETS.

Sincerely,

EU Transparency number: 666080999148-47