Brussels faces backlash over carbon trading system as production costs soar in World Economy News 04/06/2026 Several EU countries argue that planned cuts to free emissions allowances under the EU Emissions Trading System are too severe and do not reflect the technological limits faced by sectors such as steel, cement, chemicals and aluminium. Six European Union countries have raised renewed concerns over the bloc’s carbon market, saying that the costs it links to pollution could force industry to relocate production outside the EU to countries with weaker environmental rules. During a gathering of industry ministers in Brussels on Thursday, Bulgaria, the Czech Republic, Greece, Poland, Romania and Slovakia warned that their steelmakers, cement plants, aluminium smelters and chemical producers are being squeezed between soaring energy costs, geopolitical instability and tightening carbon rules under the EU Emissions Trading System (ETS), the bloc’s carbon market. At the centre of the dispute lies the upcoming revision of how many free carbon allowances industries receive. Brussels intends to tighten free allowances sharply for 2026-2030, the European Commission announced on 11 May, in some cases cutting them by up to 50% compared with the previous decade. The news was described as a “disappointment” by ministers on Thursday. Italy and Austria strike back Before the ministerial meeting, the six countries issued a document, seen by Euronews, stating their concerns. In it, they argued that the EU is asking factories to decarbonise faster than technology currently allows, noting that many heavy industries still rely on fossil-fuel heat because affordable alternatives either do not exist at scale or remain commercially unviable. The document drew support from Italy and Austria, who had been calling for the suspension of the ETS before the US-led war against Iran further exacerbated rising energy prices in Europe. Italian Minister for Industry Adolfo Urso told his counterp