Friedrich Merz Rejects Calls to Weaken EU Carbon Pricing Mechanism

German Chancellor Friedrich Merz has urged European Commission President Ursula von der Leyen to maintain the current framework of the European Union Emissions Trading System despite growing pressure from domestic industrial leaders. In a letter dated November 6, first reported by the newspaper Handelsblatt, Merz argued against fundamental revisions to the carbon pricing mechanism.

In the letter, Merz characterized the system as a functioning market-based instrument that requires stability to ensure investment security for European enterprises. He stated that companies have built their business models around predictable carbon price signals and that sticking to the established path provides planning certainty for both businesses and private households. Merz added that maintaining the system would bolster Europe's resilience against potential future crises in fossil energy markets.

The Chancellor's position places him at odds with senior executives in Germany's chemical sector who recently called for direct policy adjustments. Chief executive officers Markus Kamieth of BASF and Markus Steilemann of Covestro submitted a joint letter to Merz requesting major modifications to planned reform measures. They stated that without adjustments, the trading system would accelerate the loss of industrial capacity, noting that Europe lost ten percent of its chemical production capacity between 2022 and 2025.

Energy-intensive industries face mounting financial burdens from required emission certificate purchases alongside indirect costs from elevated electricity prices. Similar concerns regarding international competitiveness have also been raised by other European governments. Member states including Italy and the Czech Republic have recently pressed for relief measures, citing fears that carbon costs continue to weaken European manufacturing relative to international competitors.

Written by Thorben Thiede thorben.thiede@alpineweekly.com