Italy and France called on the European Commission to accelerate reforms of the EU’s Carbon Border Adjustment Mechanism and its Emissions Trading System, warning that current proposals fall short of protecting the bloc’s energy-intensive industries from unfair competition and global overcapacity.
Italy’s enterprise minister Adolfo Urso and French industry minister Sébastien Martin signed a joint declaration at the third Franco-Italian Industrial Cooperation Forum in Rome on March 3, outlining a common position on European industrial policy.
On the EU’s emissions trading system, Italy and France called for a comprehensive review to improve the stability and predictability of ETS prices, arguing this is essential for maintaining competitiveness in energy-intensive industries.
The ministers said that CBAM requires more comprehensive changes than those proposed by the European Commission in December, with particular concerns over the planned 2028 implementation date and gaps in sectoral coverage.
“We need a more coherent and more competitive Europe. There is no more time to waste: we must act immediately to save European industry,” Urso said at the forum, held under the framework of the Quirinale Treaty between the two countries.
The joint statement also said that any CBAM reform must be completed rapidly alongside ETS changes.
The European Commission is scheduled to undertake a review of its compliance market in the third quarter of this year, with items such as free allocation, the Market Stability Reserve and sectoral expansions on the table.
Under current rules, free allocations are set to be phased out completely by 2034 for sectors covered by the EU’s Carbon Border Adjustment Mechanism.
The ministers welcomed the Commission’s Dec. 17 proposal to simplify CBAM but said the extension to downstream sectors covering 180 products requires thorough review to ensure protection of all strategic EU supply chains. They expressed concern that the measure’s planned entry into force on Jan. 1, 2028, comes too late to address current competitive pressures.
Carbon price decline
European carbon prices have decreased more than Eur20/mt since mid-January as persistent calls from EU politicians for reforming the EU ETS have led to a collapse in market confidence.
Platts, part of S&P Global Energy, assessed December 2026 EUAs at Eur73.64/mtCO2e on March 3.
Officials from several member states, including Italy, Germany, France, Czechia and Slovakia, called for an overhaul of the bloc’s carbon market, arguing that current rules undermine industrial competitiveness.
The ministers criticized the commission’s proposed Temporary Decarbonization Fund as limited in scope and duration, with uncertain financial coverage and a narrow range of eligible products to compensate for the loss of competitiveness resulting from reduced free ETS allowances.
They highlighted the exclusion of the cement sector from both the fund and reformed ETS indirect cost compensation mechanisms as requiring urgent correction.
In December, the European Commission said it would establish a temporary decarbonization fund using revenues from CBAM to support domestic manufacturers with high export exposure.
“We reiterate the need for real and effective support for European exporters,” the statement added.
The ministers also raised concerns about the commission’s proposal to include pre-consumer metal scrap among CBAM precursors, warning this could create implementation problems due to difficulties distinguishing pre-consumer from post-consumer scrap. They said the inclusion could prove counterproductive for European low-emission steel production and proper market functioning.
