European pulp and paper industry joins steel and chemicals giants in demanding freeze on EU ETS benchmarks

The European pulp and paper sector has added its voice to growing industry pressure on the European Commission to maintain current EU Emissions Trading System (ETS) benchmark values for the 2026–2030 period, warning that sharp reductions could derail decarbonisation efforts and harm a strategic EU industry.

In a press release issued on 15 June 2026, the Confederation of European Paper Industries (Cepi) urged the Commission to keep the 2021–2025 benchmark levels unchanged. The sector argues that the proposed updates – which could slash benchmarks by up to 50% for much of the industry based on 2021–2022 data – fail to account for soaring energy costs, geopolitical instability, and global competition.

This call echoes similar demands from major steel and chemicals producers. Just days earlier, ArcelorMittal, ThyssenKrupp, Voestalpine, and BASF urged an immediate halt to ETS cost escalation, describing the policy as increasingly detached from global realities and a threat to Europe’s manufacturing base.

Several national governments have also expressed concerns about the benchmark revisions.

Strategic sector at risk

The pulp and paper industry positions itself as a key asset in the EU’s transition to climate neutrality by 2050. It benefits from a strong bioeconomy advantage: in 2023, the EU bioeconomy was valued at €2.7 trillion (5% of GDP), with significant global growth potential. Unlike many other sectors, Europe retains a competitive edge here, particularly in bio-based materials and recycling.

However, Cepi warns that the Commission’s proposal ignores these strengths. Companies have already used the ETS to finance investments and have cut greenhouse gas emissions by more than 50% since 2005. Deeper decarbonisation will require annual investments seven times larger than current levels. The proposed changes risk removing €1 billion per year from that investment capacity, lengthening payback periods dramatically.

For example, a €250 million investment in a single mill to reach 98% fossil-free production would, at a €70/ton CO₂ price, deliver only about €10 million in annual savings — resulting in a payback period exceeding 25 years.

Competitiveness and biomass concerns

European operators and consumers currently bear around 80% of global carbon costs, while non-EU competitors face far lower burdens. This disparity heightens the risk of carbon leakage.

Additionally, the ETS penalises early adopters: many pulp and paper plants rely on secondary biomass for heat, but a 95% biomass threshold removes access to free allowances, potentially discouraging further fossil-fuel phase-outs.

Jori Ringman, Cepi Director General, said:

“Working with the EU ETS as an investment incentive, we have reduced greenhouse gas emissions by more than 50% since 2005. But the rest of the road to net zero emissions by 2050 will be harder, and the proposed benchmark reductions, based on now obsolete projections which do not reflect current market conditions, could make success almost impossible.”

With the Commission’s ETS review expected in mid-July, pressure is mounting from multiple energy-intensive industries and member states for adjustments that balance climate ambition with industrial survival in a challenging global environment.

Caption: A photo from Fabriano paper mill in Marche, Italy. For centuries, Fabriano has been Europe’s leading centre for paper production, renowned since the 13th century for pioneering high-quality handmade paper techniques that supplied artists, printers, and institutions across the continent. [Wikimedia Commons]