Italy Pushes to Scrap ETS Benchmark Revision as Industrial Cost Gap Widens
Italy is pushing Germany and Brussels to bin planned ETS benchmark changes that industry says would deepen a competitiveness gap already costing billions per plant annually.
Goldman Sachs ran a plant-by-plant analysis of European manufacturing and found a large car factory can be carrying €500 million a year in excess power costs against a US rival, with a chemical plant sitting closer to €1 billion, oilprice.com reported on Friday (2026-09-11).7
Italy has built its ETS campaign around exactly that arithmetic. Rome has urged the European Commission to scrap a planned revision to ETS benchmark values, the rules that determine how many free carbon allowances energy-intensive industries receive, warning the update would raise compliance costs for manufacturers already at a cost disadvantage, Montel reported. Getting the Commission to reverse course on a live regulatory process is not straightforward, but Italy has framed the issue as one of industrial survival rather than regulatory preference.1
The vulnerability is visible in Italy's energy mix. The country draws on gas for around 25% of its total energy consumption, with industrial applications a core driver, while the ETS covers roughly 40% of the EU's total greenhouse gas emissions, according to data reported by edie.net and attributed to Reuters. Any tightening of benchmark stringency reduces the free allowance pool and pushes more of the carbon bill directly onto energy-intensive manufacturers.5
Italian industry group Confindustria formalised its position ahead of the Commission's revision talks, presenting Brussels with a 10-point package in June (2026-06-10) aimed at cutting carbon costs and preserving manufacturing competitiveness, Montel reported.3
The opposition spreads well beyond Italy. Energy-intensive industries across Europe pressed hard against the Commission's proposed benchmark updates ahead of a member state vote scheduled for Monday (2026-06-15), calling for the changes to be delayed pending a broader review, Montel reported. The Goldman data cited by oilprice.com does not single out any country, but European carmakers and chemical producers in Germany face the same cost differential logic. A blocking minority in the EU Council requires major industrial states, and Germany's alignment would materially shift Italy's leverage in Brussels.4,7
Rome has been working the Commission directly. A government source told Montel in May (2026-05-21) that Italy was in almost daily contact with Brussels over its own ETS reform proposal and had received no negative feedback at that point. The source described the Cisaf framework as allowing case-by-case assessment and faster approval procedures, suggesting Italy sees a technical route to restructuring allowance distribution rather than reopening the full legislative process.2
Analysts are less confident the proposal clears the legal bar. Italy's approach may conflict with the EU's updated state aid framework, Montel reported, with analysts noting the legal architecture has shifted since Rome drafted its original submission. The Commission had not signalled objections as of late May (2026-05-21), but analysts saw potential friction ahead.2
ETS2 adds a separate pressure point. Ten member states have raised concerns that extending carbon pricing to heating fuels and road transport would pile fresh costs on households already strained by elevated energy prices, edie.net reported. ETS2's cap targets a 42% reduction in covered emissions against 2005 levels by 2030.6
Italy's demand to scrap the benchmark revision entirely, rather than negotiate its parameters down, is the harder political ask. It requires enough large member states to conclude the Commission's timetable is wrong in principle, not just that the calibration needs adjusting. Germany's position in any blocking effort separates a manageable setback for Brussels from a forced rethink of the revision schedule — and with European plants running nine-figure annual cost gaps against US rivals, both delegations have a concrete case to take into the next round of formal talks.7,4,1