BusinessEurope has called on the European Union to redesign its Emissions Trading System (ETS), warning that current trends could force factory closures before 2039. The group said the carbon market needs more flexible mechanisms to address hard-to-abate sectors and safeguard competitiveness as global rivals expand industrial subsidies.

Under existing rules, free allowances for sectors covered by the Carbon Border Adjustment Mechanism (CBAM) will be phased out by 2034. BusinessEurope urged a delay if a 2027 review finds CBAM fails to prevent carbon leakage. 

With carbon prices volatile and energy costs still high, the association warned that insufficient protection could accelerate deindustrialization across Europe.