Italy and the Czech Republic have told Brussels that Europe’s industrial base faces lasting damage unless the bloc eases its green rules. In a joint letter, the two governments describe an unprecedented energy shock and warn that high costs are already pushing production out of the continent.
The language is blunt. “While security of supply remains the immediate priority, the combination of some of the world’s highest energy prices, high carbon costs and exceptional fuel prices risks further weakening European manufacturing and accelerating the relocation of production and investment,” the letter says.
The Capitals Coordinate
Italian Prime Minister Giorgia Meloni travelled to Prague last week to meet her Czech counterpart, Andrej Babiš. Their goal: settle a common plan before EU leaders meet in Brussels next week. European competitiveness is expected to feature prominently when leaders gather on October 15.
Rome and Prague are targeting two areas: the bloc’s carbon market, already under political scrutiny, and its recently weakened methane rules. They’re also seeking a broader coalition inside the European Council. This isn’t a lone protest. It’s an attempt to build a bloc of governments.
What They’re Asking For
Their proposal centres on targeted measures to give struggling factories immediate relief. Two stand out. The first would extend free carbon allowances for heavy industry under the Emissions Trading System (ETS). The second would freeze the phase-out of free carbon allocations for sectors affected by the bloc’s carbon border tax.
The two countries call these measures “temporary” and say they “preserve long-term climate objectives.” Yet several demands would significantly change how the EU applies climate rules to industry.
The letter also floats a more drastic option. “A temporary suspension of the EU ETS would provide immediate relief to European industry from carbon costs,” it says. “However, in the absence of sufficient support for such an option, it is worth considering a number of targeted and immediately actionable alternatives that the European Council could promote to alleviate the impact of the current shock and complement measures already announced at European level.” In other words, suspension is the opening bid; narrower measures are the fallback.
A Wider Push Among Member States
Italian Defence Minister Guido Crosetto went further in public. He 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. “A tax like the ETS today is unjust, absurd, unsustainable in international competition, and creates inequalities because it falls indiscriminately and equally on all European end consumers,” Crosetto wrote on X.
Other governments are making the same case in quieter settings. Austria’s Energy Minister Wolfgang Hattmannsdorfer argued on the sidelines of a competitiveness ministers’ meeting in Brussels on 24 September for “economic patriotism” to keep industries and jobs in Europe. Maintaining European production, he said, is crucial for regional wealth, welfare and environmental standards.
The Meloni-Babiš initiative is the latest sign of a broader push among EU capitals to give industrial competitiveness greater weight in implementing the bloc’s climate policies.
Why This Matters:
Rome, Prague and Vienna argue that climate targets and industrial survival can’t be treated as separate files. If factories relocate, emissions don’t vanish; production and investment move outside the EU, along with the jobs. For member states, the stakes are fiscal as well as political: lost manufacturing erodes tax bases and regional prosperity. The October 15 summit will test whether leaders will adjust how they apply the rules without abandoning long-term goals. It will also show whether Brussels treats national governments’ warnings about carbon costs as a signal to recalibrate, or as pressure to resist. How the European Council answers will shape the credibility of EU climate policy with the industries and voters who must live with its costs.