Just as the need for action is becoming clear, Europe is considering weakening the economic incentive to reduce CO₂ emissions, and Jan Willem van de Groep thinks that’s very unwise. “Those who wait get a reprieve, while the frontrunners pay the price.”
Europe wants to give industry more time to become more sustainable. The European Commission is considering amending the Emissions Trading System (ETS) so that the number of available emission allowances declines more slowly after 2030 and companies may retain free allowances for longer. The reasoning sounds familiar: high energy prices, international competition, and the time needed for new technologies. All true. But there’s a world of difference between giving time for the transition and buying time for the existing system.
At its core, the ETS is simple: whoever emits, pays. By reducing the number of emission allowances each year, the price of pollution rises, creating an incentive to invest in cleaner production. At least in theory. In practice, a large portion of industry still receives allowances for free. Now that the cost of emissions is set to rise further, political pressure is mounting to slow down that phase-out. This is becoming increasingly difficult to justify to the public. Climate change is no longer an abstract vision of the future; its consequences—from heat waves to flooding—are now part of our daily reality. Just as the need for action is becoming clear, Europe is considering weakening this economic incentive. This does not feel like sensible phasing, but rather like backing down the moment the transition really starts to bite economically.
Of course, a temporary delay is sometimes necessary. A factory can’t switch to electricity if the power grid is at capacity, or use hydrogen if the pipelines aren’t in place. But granting free emission allowances without strict investment requirements isn’t industrial policy; it’s a delaying tactic. Moreover, such a relaxation affects not only the laggards but also the frontrunners who are already investing in low-carbon production.
The business case for low-carbon concrete, cleaner insulation materials, or industrial timber construction is partly based on the financial benefit of avoided emissions. Anyone who delays the phase-out of emission allowances not only lowers the bill for the polluter but also reduces the expected return for the frontrunner. After all, a concrete producer investing millions in a low-carbon process does so in the expectation that conventional cement will become more expensive. When Europe weakens the price incentive, that calculation changes: the old facility gains breathing room, while the new one loses its lead. This creates a harmful pattern: those who act early take a risk; those who wait long enough are granted a reprieve.
At the same time, Europe is working on certification for carbon storage and negative emissions. That’s valuable, but a certificate alone doesn’t create a market. As long as the value of avoided emissions is downplayed and stored CO₂ does not yet have full economic value, the balance will remain skewed. With one hand, we’re building a system for negative emissions; with the other, we’re protecting the fossil fuel status quo.
Industrial policy should not revolve around the question of how much protection existing factories need, but rather around the question of what production chains Europe will need in 2040. This requires two interrelated steps. Grant companies extra time only when there is a demonstrable lack of technology or infrastructure, linked to binding investment commitments and a firm deadline. At the same time, ensure that the value of avoided emissions and removed carbon is structurally and reliably reflected in the market, either through the ETS or a separate reward mechanism.
Without this link, the message to investors remains ambiguous. The industry needs time, but time is only a transition policy if it is clear where it is leading. Otherwise, the polluter still won’t pay, and the frontrunner will pay the price for its lead.
