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Emissions trading: Why adhering to free emissions allowances could harm industry

German industry faces billions of euros in extra costs when free emissions allowances expire. But maintaining the subsidies would tear a large hole in the EU Innovation Fund, intended to help finance decarbonization.

Nico Beckert
04. November 2025
German Chancellor Friedrich Merz and Economics Minister Katherina Reiche are in favor of retaining free emissions allowances. (IMAGO / dts Nachrichtenagentur)

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Last updated: 04. November 2025

Emissions trading Europe Germany Chemical industry Industry Industrial emissions Industrial policy Steel industry Cement industry CO₂ price ETS