Six European Union member states are opposing Brussels’ proposal to gradually reduce free carbon permits for heavy industries, arguing that soaring energy costs linked to the Iran war could weaken the competitiveness of manufacturers across the bloc.
Bulgaria, the Czech Republic, Greece, Poland, Romania and Slovakia have jointly called on the European Commission to freeze free CO2 allowances at 2025 levels instead of reducing them through 2030, according to a document seen by Reuters.
The countries warned that high electricity and fuel prices, which have climbed sharply since the conflict involving Iran escalated in late February, are putting major pressure on energy-intensive sectors such as steel, cement and chemicals.
They argued that stricter carbon costs could force some companies to scale back operations, shut down plants or relocate production outside the European Union, threatening jobs and industrial output.
The European Commission had earlier proposed revised rules aimed at slowing the reduction of free permits, a move Brussels said would lower industry carbon costs by about 4 billion euros ($4.66 billion) before the end of the decade.
The EU Emissions Trading System remains the bloc’s central policy tool for cutting greenhouse gas emissions by requiring industries to purchase permits for the carbon they emit.
However, divisions have emerged among member states over how quickly industries should transition away from free pollution allowances as Europe balances climate goals with economic competitiveness.
Countries including Spain and Sweden have reportedly urged the Commission not to weaken the carbon market, arguing that maintaining stricter emissions policies is necessary to support the EU’s clean energy transition.
Industry ministers from EU countries are expected to discuss the proposal and the concerns raised by the six governments during a meeting on Thursday, ahead of a final decision expected by the end of June.
The debate comes as Brussels prepares a broader overhaul of the EU carbon market in July to align the emissions trading system with the bloc’s long-term 2040 climate targets.