First cash, then attack: the chemical lobby's attack on the EU's emissions trading scheme

The European Commission faces a critical decision regarding the future of the European Union's most important climate protection tool: the European Emissions Trading System (ETS). This system, which has been central to EU climate policy, is currently under intense scrutiny as powerful chemical industry lobbyists push for reforms that could weaken its effectiveness. The conflict spans multiple levels, involving not just environmental organizations but also companies, political opposition, and even parts of the German government. At stake is the balance between industrial interests and global climate goals. The debate over the ETS reform has been ongoing for months, with significant lobbying efforts taking place both in Brussels and Berlin. Internal documents obtained exclusively by CORRECTIV reveal how chemical industry representatives have been actively working to influence the direction of the reform. These efforts include meetings with high-ranking officials within the European Commission and discussions with politicians who might support their cause. A senior executive from a major German chemical company confirmed to CORRECTIV that all available resources are being used to resist changes to the current framework of the Emissions Trading System. Currently, the ETS operates on a principle where companies that emit less carbon dioxide pay less, while those emitting more face higher costs. This mechanism encourages industries to reduce emissions by making it economically beneficial to do so. However, this foundational principle is now under threat, particularly from the chemical industry. Industry leaders argue that the upcoming reforms would impose excessive financial burdens on them, especially when competing internationally. They demand substantial relief measures, including the suspension of planned reductions in free emission allowances and delays in benchmark adjustments. Such actions would effectively grant the sector billions in savings and additional time to achieve climate neutrality. At the heart of the lobbying campaign stands the European Chemical Industry Council (CEFIC), the largest umbrella organization representing the chemical sector in Europe, closely linked with major players such as BASF. According to exclusive information, CEFIC representatives met with various members of the European Commission at least 44 times in the first six months of this year alone. Some of these meetings included participation from BASF executives, highlighting the extent of the industry’s engagement in influencing the reform process. BASF, one of the world's leading chemical companies, has explicitly referenced recent statements made by German Chancellor Friedrich Merz of the Christian Democratic Union (CDU) regarding the ETS. Merz had suggested that if a system isn't functioning properly, it should be changed or shifted. This rhetoric appears to have been adopted by BASF in its own lobbying strategy. In internal documents obtained by CORRECTIV, the company outlines several immediate measures it seeks, including suspending the phase-out of free emission allocations and delaying ongoing benchmark adjustments. These proposals would result in significant cost reductions for the industry and extended timelines for achieving climate neutrality. The resistance against the ETS reform comes not only from the chemical industry but also from certain segments of the German government. Notably, some top-level CDU politicians appear to be diverging from their previous stance of supporting the ETS as a market-based instrument on the path to climate neutrality. Their alignment with the chemical industry suggests a potential shift in policy priorities, possibly favoring industrial interests over stringent climate protections. As the European Commission prepares to announce its position on the ETS reform by mid-July, the outcome remains uncertain. The proposed changes could significantly alter the trajectory of EU climate policy, affecting not only the chemical industry but also other sectors that rely on the ETS for compliance with emission targets. Environmental groups and progressive policymakers remain vigilant, warning that weakening the ETS could undermine broader climate objectives. Meanwhile, the chemical industry continues to push for modifications that align more closely with its economic interests, setting the stage for a pivotal moment in the evolution of EU climate regulation.