Italy and the Czech Republic have warned Brussels that the EU’s industrial base risks lasting damage unless the bloc eases its green rules. High energy and carbon costs are hitting European manufacturing. In a joint letter ahead of next week’s EU leaders’ summit in Brussels, they call for changes to how climate policy applies to industry, putting domestic production and national economic priorities at the centre of the debate.
Industry and national control
The two countries describe the situation as an unprecedented energy shock. Their letter says some of the world’s highest energy prices, high carbon costs and exceptional fuel prices risk weakening European manufacturing and accelerating the relocation of production and investment. It ties the immediate question of energy supply to the longer-term future of European factories and investment.
Italian Prime Minister Giorgia Meloni visited her Czech counterpart Andrej Babiš in Prague last week to coordinate a plan before the summit. Rome and Prague are targeting the bloc’s carbon market and its recently weakened methane rules. They’re also seeking a broader coalition within the European Council, where they want industrial competitiveness to carry more weight in how the EU applies its climate policies.
Their proposal calls for targeted measures to offer immediate relief to struggling factories. It includes extending free carbon allowances for heavy industry under the Emissions Trading System, or 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.
Carbon costs under scrutiny
Italy and the Czech Republic call the proposed interventions “temporary” and say they would “preserve long-term climate objectives”. Several demands would significantly change how the EU applies climate rules to industry. The letter says a temporary suspension of the EU ETS would provide immediate relief from carbon costs, while offering targeted alternatives if the European Council doesn’t support a suspension.
“A temporary suspension of the EU ETS would provide immediate relief to European industry from carbon costs,” the letter says. It adds that, without enough support for that option, the European Council could promote “targeted and immediately actionable alternatives” to ease the impact of the current shock and complement measures already announced at European level.
The proposal leaves EU leaders with a choice: suspend the carbon market or pursue narrower relief measures. Rome and Prague are asking for action at the European level and support from other capitals. Their letter says the measures should address the present shock while retaining the bloc’s long-term climate objectives.
A wider push for competitiveness
Italian Defence Minister Guido Crosetto has separately 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.
The Meloni-Babiš initiative follows similar calls from other EU capitals to give industrial competitiveness greater weight in implementing climate policies. Austria’s Energy Minister Wolfgang Hattmannsdorfer made that 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.
Next week’s summit in Brussels comes amid pressure from national governments to protect manufacturing from energy and carbon costs. Italy and the Czech Republic are seeking immediate relief for factories and a broader coalition to change the bloc’s rules.