100+ firms sign letter calling attack on Europe’s carbon market a ‘serious misdiagnosis’ 

IKEA, Unilever and Volvo among firms asking for ‘targeted’ revisions to EU ETS, while second statement focuses on weaning industry off fossil fuels

Nearly 150 companies are arguing that efforts to blame the financial woes of European industry on its carbon price constitute a “serious misdiagnosis”. 

Firms including EDF, Holcim, IKEA, Unilever and Volvo have signed an open letter noting that “calls have grown louder to ease pressure on energy intensive companies in the name of competitiveness”. 

They argued that, instead of identifying the underlying drivers of “economic erosion”, such as high energy bills and a fragmented single market, the current debate has been “misdirected towards amending or even suspending the EU ETS”.   

“This would be a serious misdiagnosis of the problem,” the letter stated.  

Discussions should focus on making “targeted” updates to the EU ETS, including better rules around how Member States spend the revenues they generate from the system.  

“Revenues need to be channelled toward accelerating industrial electrification by enhancing access to low-carbon energy and supporting breakthrough technologies that reinforce the EU’s industrial base and its strategic autonomy,” said the companies. 

This could involve investing more in energy grids and storage, and supporting long-term clean industrial Power Purchase Agreements (PPAs). 

“Maintaining a strong ETS, refined where necessary, but not diluted, is essential,” concluded the letter. 

A number of the same firms signed a different statement this week, claiming that “a robust carbon price is essential for driving decarbonisation”. 

In a week that saw oil prices hit their highest levels since 2022, the document urged EU lawmakers to keep energy costs down by electrifying more of Europe.  

“For too long the EU has been at the mercy of imported and volatile fossil fuels, and we continue to be more dependent than our global competitors including China and the US,” said the statement, which was also signed by Amazon, H&M and Velux. 

Specifically, they say the EU’s forthcoming Electrification Action Plan should propose a 50% target for the electrification of final energy use by 2040. 

It should also focus on tackling the high upfront costs the companies face when transitioning to green electricity, as well as regulatory instability and poor grid connections. 

“Eroding keystone policies such as CO2 standards for cars, energy efficiency targets, energy performance of buildings or ETS allowances’ phase-out trajectory may well have knock-on effects on critical efforts to drive electrification and therefore future EU competitiveness,” the statement warned. 

“The emphasis should now be put on guidance, implementation and shaping the next generation of energy policies to kick in after 2030, rather than on attempts to re-examine agreed legislation.”