EU ETS reform: impending cost shocks for EU producers

Fastmarkets

Jan 15

Market attention has focused on the EU’s Carbon Border Adjustment Mechanism (CBAM) from 2026 for importers of industrial products into the EU market. However, the EU ETS (EU Emissions Trading System) ...

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One of the best stock trading platforms in Singapore.","ogImage":"https://c1.itigergrowtha.com/portal5/static/media/og-logo.be62fbe1.png","ogUrl":"https://www.itiger.com/news/2603609932"},"companyName":"Tiger Brokers"},"pageData":{"isMobile":false,"isTiger":false,"isTTM":true,"region":"SGP","license":"TBSG","edition":"fundamental"},"isCrawlerRequest":true,"__swrFallback__":{"@#url:\"https://stock-news.skytigris.cn/v3/news\",params:#id:\"2603609932\",edition:\"fundamental\",auth_exemption:1,,,undefined,":{"share":"https://ttm.financial/m/news/2603609932?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2026-01-15 13:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2603609932","market":"us","top_or_hot":-1,"title":"EU ETS reform: impending cost shocks for EU producers","media":"Fastmarkets","content":"<div>\n<p>Market attention has focused on the EU’s Carbon Border Adjustment Mechanism (CBAM) from 2026 for importers of industrial products into the EU market. However, the EU ETS (EU Emissions Trading System) ...</p>\n\n<a href=\"https://www.fastmarkets.com/insights/eu-ets-reform-impending-cost-shocks-for-eu-producers/\">Source Link</a>\n\n</div>\n","source":"fastmarkets_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>EU ETS reform: impending cost shocks for EU producers</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEU ETS reform: impending cost shocks for EU producers\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-01-15 13:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fastmarkets.com/insights/eu-ets-reform-impending-cost-shocks-for-eu-producers/><strong>Fastmarkets</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Market attention has focused on the EU’s Carbon Border Adjustment Mechanism (CBAM) from 2026 for importers of industrial products into the EU market. However, the EU ETS (EU Emissions Trading System) ...</p>\n\n<a href=\"https://www.fastmarkets.com/insights/eu-ets-reform-impending-cost-shocks-for-eu-producers/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4232","symbol_name":"货物陆运","start_time":0,"source_url":"https://www.fastmarkets.com/insights/eu-ets-reform-impending-cost-shocks-for-eu-producers/","article_id":"2603609932","we_media_id":null,"thumbnails":[],"rights":{"source":"fastmarkets_highlight","url":"https://www.fastmarkets.com/insights/eu-ets-reform-impending-cost-shocks-for-eu-producers/","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2603609932","pubTimestamp":1768453200,"columns":[],"sourceInfo":{"source_id":"fastmarkets_highlight","name":"Fastmarkets"},"weMediaInfo":null,"summary":"The EU ETS reform, including the phase-out of free allocations, is set to significantly increase emissions costs for EU industrial producers, with effective EUA prices rising sharply by 2035, driving substantial cost pressures and price increases across key sectors like steel, aluminium, and downstream industries such as automotive and construction.","collect":0,"end_time":0,"defaultTopTitle":"fastmarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4232":"货物陆运","BK4156":"煤与消费用燃料","ETS":"Elite Express Holding Inc."},"translate_title":"欧盟排放交易体系改革：欧盟生产商即将面临的成本冲击","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ETS":1.5},"content_text":"Market attention has focused on the EU’s Carbon Border Adjustment Mechanism (CBAM) from 2026 for importers of industrial products into the EU market. However, the EU ETS (EU Emissions Trading System) reform and the phase-out of free allocations are set to drive a sharp rise in effective EUA prices, materially increasing emissions costs for EU steel, aluminium, and other industrial producers. \nEffective EUA prices (per tonne of industrial emissions)1 will rise as high as 14-43x 2025 levels by 2035 in aluminium and steel markets, according to Fastmarkets analysis. This is reflected in estimated total direct carbon costs (excluding phase 2) rising over 2025 to 2035 from €0.2bn to €1.8bn in aluminium, from €0.7bn to €16.4bn in iron and steel, and from €362mn to €711mn in pulp and paper.\n\nPrice increases follow increased emissions costs\nIncreased emissions costs arising from the EU ETS reform will be reflected in product prices. A typical producer of steel billets would have paid 26€ on average for emissions per tonne of billet in 2025, equivalent to around 3.4% of the total price. Based on Fastmarkets forecasted EUA prices and the free allocation phase out schedule, this could increase to 30% by 2035. \nThese costs are likely to pass downstream to products such as hot rolled coil, with implications for end-use sectors. The automotive and construction sectors account for as much as 80% of demand for hot rolled coil and steel overall2, making these sectors particularly sensitive to price increases. A typical vehicle produced in Europe contains around 900kg of steel of average3, which could translate into an increase in costs of up to €265 per vehicle by 2035.\n\nEffective EUA prices will rise from historically low levels\nHistorically, effective EUA prices have remained low, as a high proportion of EUAs have been freely allocated to industrial installations to prevent carbon leakage. Within the EU’s aluminium and iron and steel sectors, 78% and 90% of EUAs were freely allocated to each sector, respectively in 2025. This reduced the effective price paid by producers in these sectors by up to ten times, to 16€/tCO2e for aluminium and 7€/ tCO2e for steel. This contributes as little as 1% of total product price today. Following CBAM’s introduction, EU ETS reform will phase out free allocation until 2034, when EU producers will face the full cost of their emissions.\nThis coincides with projected EUA price increases, driven by tighter supply. Since 2013, the EU has applied a linear reduction factor on the ETS cap, reducing the number of allowances released into circulation. This was increased from 1.74% to 4.3% per year in 2024 and is set to increase to 4.4% from 2028.\nThe impact of EU ETS reform on EU industry competitiveness\nWhile EU producers are expected to face significant cost increases under EU ETS reform, the introduction of CBAM aims to keep EU industry in a competitive position compared to imports. For many major steel and aluminium producing countries, CBAM is forecast to incur higher costs for international producers compared to costs incurred from the EU ETS for EU producers. \nCountries such as India, where carbon-intensive BF-BOF steel production remains prevalent and industrial emissions intensity is relatively high, could face cost increases from present levels of over 120% of current product prices by 2035 due to CBAM. By comparison, EU producers are expected to face cost increases of around 13% by 2035 because of rising emissions costs under the EU ETS.\n\n\nOn average, EU producers are expected to face smaller cost increases than the average international producers. However, EU producers of steel and aluminium currently face some of the highest production costs across world producers4 5 a result of the high costs of labour, raw materials, and energy. EU ETS reform introduces an additional cost, with outcomes increasingly dependent on emissions intensity at the installation level. Alongside EU producers’ pre-existing high production costs, they will not be competing against the average international producer, but against the most efficient exports from these countries. \nThe large volumes of emissions-efficient exports make these producers strongly competitive with domestic goods. China’s steel and aluminium production volumes are around eight times higher than the EU for steel and aluminium6 7 and in 2024, China’s EAF capacity was greater than the EU’s capacity of both EAFs and BOFs8. The US, another direct competitor with major export volumes to the EU, also has a comparatively more efficient iron and steel production profile. Even if CBAM works as intended, competition from these emissions-efficient producers is likely to remain a structural challenge for EU industry. To remain competitive, EU producers will need to continue investing in more emissions-efficient production processes.\nUnderstanding how these policy changes will affect effective emissions costs, product pricing, and industry competitiveness across regions requires visibility into the evolving policy environment, EUA price dynamics, and sector- and region-specific sensitivities. As free allocation is phased out under EU ETS reform, exposure to effective EUA prices is expected to increase, with outcomes increasingly differentiated by emissions efficiency at the facility level.\nFastmarkets’ EU ETS product supports this analysis with scenario-based outlooks, facility and company intelligence, and continuous market coverage, enabling users to benchmark exposure and track how EU ETS reform and effective EUA prices are reshaping cost positions across the market. This complements our existing CBAM intelligence suite to give a comprehensive view on the evolution of costs for domestic and international producers. \nWorld Steel Association (2026) Steel use by sector. Available at: https://worldsteel.org/data/steel-use-by-sector/ (Accessed: 8 January 2026) ↩︎Business Research Insights (2025) Hot Rolled Coil Steel Market Size, Share, Growth, and Industry Analysis, By Type, By Application, and Regional Insights and Forecast 2026 to 2035. Available at: https://www.businessresearchinsights.com/market-reports/hot-rolled-coil-steel-market-118301 (Accessed: 8 January 2026) ↩︎Hascall Steel (2024) Steel making vehicles lighter: reducing emissions. Available at: https://hascallsteel.com/steel-making-vehicles-lighter-reducing-emissions/ (Accessed: 8 January 2026). ↩︎EUROFER (2023) Technical report on production costs from the iron and steel industry in the EU and third countries. Brussels: European Steel Association. Available at: https://www.eurofer.eu/assets/news/eu-technical-report-on-production-costs-from-the-iron-and-steel-industry-in-the-eu-and-third-countries/production_costs_from_the_iron_and_steel_industry_-_final_online.pdf (Accessed: 8 January 2026). ↩︎ING Think (2024) Aluminium’s green transformation: can Europe compete with China and the US? Available at: https://think.ing.com/articles/aluminiums-green-transformation-can-europe-compete-china-us (Accessed: 8 January 2026). ↩︎International Aluminium Institute (2025) Primary aluminium production statistics. Available at: https://international-aluminium.org/statistics/primary-aluminium-production/ (Accessed: 8 January 2026). ↩︎World Steel Association (2025) Annual crude steel production data. Available at: https://worldsteel.org/data/annual-production-steel-data/ (Accessed: 8 January 2026). ↩︎Global Energy Monitor (2024) China steel brief: March 2024. San Francisco: Global Energy Monitor. ↩︎","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}