Italy and the Czech Republic have warned Brussels that the EU’s industrial base risks lasting damage unless the bloc eases green rules, citing what they call an unprecedented energy shock. Their joint letter says high energy prices, carbon costs and fuel prices are weakening European manufacturing and could speed the relocation of production and investment.
The proposed relief for industry
The two governments want changes to the EU’s carbon market and recently weakened methane rules. Their proposal would extend free carbon allowances for heavy industry under the Emissions Trading System (ETS) and freeze the phase-out of free carbon allocations for sectors affected by the bloc’s carbon border tax.
The letter calls the proposed measures temporary and says they’d preserve long-term climate objectives. Yet it also says a temporary suspension of the ETS would bring immediate relief from carbon costs. Without enough support to suspend the system, the governments say, the European Council could advance targeted alternatives that can take effect immediately.
The letter says those alternatives would complement measures already announced at European level. It doesn’t specify those measures in the text provided. Italy and the Czech Republic are seeking a broader coalition within the European Council as the bloc weighs its response to pressure on industry.
A wider fight over climate rules
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. European competitiveness is expected to feature prominently at the leaders’ meeting on October 15.
The initiative forms part of a broader push among EU capitals to give industrial competitiveness greater weight in implementing climate policies. The letter ties pressure on manufacturing to what it calls some of the world’s highest energy prices, high carbon costs and exceptional fuel prices.
Italian Defence Minister Guido Crosetto has also urged a suspension of the ETS until economic conditions improve. “There would be better times” to reintroduce the carbon market to protect the environment, he said. Crosetto wrote on X that the ETS was “unjust, absurd, unsustainable in international competition, and creates inequalities because it falls indiscriminately and equally on all European end consumers.”
Calls to protect European production
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.
Hattmannsdorfer argued that keeping production in Europe is crucial for regional wealth, welfare and environmental standards. His remarks and the Italy-Czech letter add to pressure from EU capitals to protect domestic manufacturing as high energy and carbon costs collide with decarbonisation targets.
The Italian and Czech proposal would change how the EU applies climate rules to industry. The two governments describe the measures as temporary interventions; their letter also sets out possible suspension of the ETS alongside more targeted alternatives. EU leaders are expected to discuss the issue as they consider competitiveness at their October 15 meeting.