Italy and the Czech Republic have warned Brussels that the EU’s industrial base risks lasting damage unless the bloc eases green rules. Their joint letter calls for relief for factories, arguing that high energy prices, high carbon costs and exceptional fuel prices threaten European manufacturing and could accelerate the relocation of production and investment.
Governments set the terms
Italian Prime Minister Giorgia Meloni visited her Czech counterpart Andrej Babiš in Prague last week to coordinate a plan ahead of next week’s EU leaders’ summit in Brussels. The two governments are seeking a broader coalition within the European Council, where national leaders will consider industrial competitiveness in the bloc’s policies.
The initiative targets the EU’s carbon market and recently weakened methane rules. Its proposals include extending free carbon allowances for heavy industry under the Emissions Trading System (ETS), and freezing the phase-out of free carbon allocations for sectors affected by the bloc’s carbon border tax. European competitiveness is expected to feature prominently at the leaders’ meeting on October 15.
The letter describes the proposals as temporary measures that preserve long-term climate objectives. But they would significantly change how the EU applies climate rules to industry. Italy and Czechia say a temporary suspension of the ETS would provide immediate relief from carbon costs; where that option lacks sufficient support, they ask the European Council to promote targeted alternatives that can be acted on immediately.
The machinery of policy is plain to see. Governments want European institutions to change the rules governing industrial costs. The letter names security of supply as the immediate priority, while its signatories warn that manufacturers may move production and investment elsewhere if costs remain high.
The carbon price under pressure
Italian Defence Minister Guido Crosetto has also argued that the ETS should be suspended until economic conditions improve. “There would be better times” to reintroduce the carbon market to protect the environment, he said. In a post on X, Crosetto called the ETS “unjust, absurd, unsustainable in international competition,” and said it creates inequalities because it falls “indiscriminately and equally on all European end consumers.”
That argument puts industrial costs and the burden on consumers at the centre of the dispute. The letter also portrays high energy and carbon costs as a threat to European manufacturing, while proposing to extend or preserve free allocations for industry. Governments and EU institutions are debating those choices, but the text gives workers and communities no role in deciding how the costs and benefits should be distributed.
Competitiveness takes the floor
Italy and Czechia’s proposal forms part of a broader push among EU capitals to give industrial competitiveness greater weight when applying climate policies. Austria’s Energy Minister Wolfgang Hattmannsdorfer made a similar case on the sidelines of a competitiveness ministers’ meeting in Brussels on 24 September. He called for “economic patriotism” to keep industries and jobs in Europe, arguing that maintaining European production is crucial for regional wealth, welfare and environmental standards.
Rome and Prague call their interventions temporary, but the letter’s demands would alter how climate rules operate for industry. The immediate question for EU leaders is whether to back those changes as relief for factories. The institutions will weigh the proposals at the summit, while the debate’s stated costs reach beyond industrial policy to end consumers and the goals of decarbonisation.