EU stalls €75 carbon border vote

A two-day delay in Brussels rarely deserves attention on its own. This one does. The European Commission moved its review of the Emissions Trading System from 15 July to 17 July (Argus), while member states pushed a vote on carbon-border import rules to September (Sendeco2). The delay exposes the real fight: whether Europe’s heavy industry should keep receiving free pollution permits after 2030, and who pays if it does.

Why Free Permits Are Worth Fighting Over

The EU’s carbon market, known as the ETS, makes power plants and factories buy a permit for every tonne of CO₂ they emit. That permit price is the cost of carbon. To stop companies moving production outside the EU to avoid it, Brussels created CBAM, the Carbon Border Adjustment Mechanism. It charges importers of steel, cement, aluminium and other goods a comparable carbon fee at the EU border. CBAM began collecting actual payments on 1 January 2026 (EUR-Lex).

The number is not marginal. CBAM certificates cost €75.28 per tonne of CO₂ in the second quarter of 2026 (Argus, SteelOrbis). At that level, a rule on free allowances is not an environmental technicality. It is an industrial subsidy, and it decides which firms carry the carbon cost and which are protected from it.

The September vote is now being pulled in two directions. Around 40 industrial groups, including BASF, thyssenkrupp and ArcelorMittal, have demanded political intervention against rising ETS costs, warning of closures and relocation (Finanzen.net). The European People’s Party has taken up that argument, pressing Climate Commissioner Wopke Hoekstra to extend free allowances beyond 2030 (Euronews).

The European Parliament’s environment committee went the other way. On 6 July it voted 56 to 11 for a tougher CBAM text, extending coverage to roughly 180 downstream products such as car parts and appliances, and rejecting international carbon credits as substitutes for EU permits (European Parliament). That puts the committee on a direct collision course with the industrial lobby before governments vote in September.

Germany's Emissions Fell Because Factories Stopped Running

Germany’s energy-intensive industry emitted 97 million tonnes of CO₂ in 2025, a fall of 5.5%. But Germany’s own environment agency said the reduction came from lower production and weak demand, not from clean investment (Umweltbundesamt). Factories made less, so they emitted less. That is not the same as transformation.

Investigative reporting found that BASF alone received €4.7 billion in free certificates and made another €800 million from trading revenues since 2013 (Correctiv). Free permits did not force a shift in the business model. They helped preserve it.

Sweden shows the other side of the bargain. SSAB is investing roughly €6 billion to replace coal with hydrogen in steelmaking (Cyprus Mail/Reuters). Each year that competitors continue receiving free allowances weakens the return on that investment. Sweden moved first and now has to watch Brussels consider easing the burden on companies that did not.

Italy shows that industry itself is split. Upstream steelmakers want CBAM protection against cheaper foreign competitors. Downstream manufacturers of cars, appliances and machinery want the CBAM expansion delayed to 2030, because it raises the cost of the steel and aluminium they buy (SteelOrbis). Poland, with industrial electricity prices around €170–194/MWh and a coal-heavy grid, is pushing hardest for slower reductions in the emissions cap and for free allowances to continue (WP, RMF24).

For Malta, this is not a fight about smokestacks on the horizon. The island has little heavy industry of this kind. But it imports almost everything: construction materials, machinery, appliances, vehicles, packaging. A carbon price at the border eventually travels through supply chains and lands in tender prices, retail prices and public procurement. The issue for Malta is less whether a local steel plant survives, and more whether EU climate policy raises costs while still failing to push the largest industrial emitters to change.

September Decides Whether the Border Charge Works

The September vote will decide how much importers can deduct when they say they have already paid a carbon price abroad. If the deduction rules are too loose, importers can game the system and CBAM becomes a border formality. If they are too strict, exporters from countries with partial carbon pricing will see it as a disguised tariff.

That matters for a small open economy like Malta because the EU border is also Malta’s border. A weak CBAM protects European incumbents while passing little climate benefit to consumers. An overly rigid one risks feeding higher costs into sectors that already depend on imported materials.

The choice in Brussels is between two groups of companies: those that have already spent billions to decarbonise, and those that accepted free permits while continuing to emit. The evidence in this investigation does not show that extending free allowances comes with binding commitments to invest in clean production. Germany’s emissions fell because demand fell. The data points to relief for incumbents, not industrial transformation.