New European Commission proposals on the EU Emissions Trading System (ETS) could slow down decarbonisation investments in Europe’s pulp and paper industry, according to Cepi, the Confederation of European Paper Industries.
Cepi estimates that changes to the ETS benchmarks for free allowances could reduce the sector’s planned decarbonisation investments by around €1 billion per year between 2026 and 2030. The association warns that the latest proposals could further reduce the allocation of free allowances and make future decarbonisation projects more difficult to finance.
The European paper industry has reduced its emissions by more than 50% since 2005, according to Cepi. However, the association says many companies, particularly smaller businesses, still lack access to economically viable technologies to complete the transition, while larger groups are also facing increasing difficulties in financing new projects.
Cepi is particularly concerned about the conditionality attached to free ETS allowances, which would require companies to meet specific energy-efficiency and decarbonisation requirements. The association also questions the 95% zero-emission biomass criterion, which could exclude some mills from the ETS framework despite investments in energy recovery from biomass.
For smaller paper mills, Cepi is calling for a higher exemption threshold and a review of the Market Stability Reserve (MSR).
The association is urging the European Commission to reconsider the proposed ETS rules to ensure that climate policy supports, rather than undermines, investment, competitiveness and the decarbonisation of Europe’s pulp and paper industry.