EU Members Back Expansion of Free Carbon Quotas for Heavy Industry

European Union member states have endorsed the allocation of additional free carbon quotas to heavy industries. This move aims to better shield companies facing intense global competition and rising energy costs. The beneficiaries of this measure will include chemical producers, metal processing firms, and manufacturers of ceramics and glass.

Key Details of the New Allocation

The proposal grants these industries an additional 121 million free CO₂ quotas for the period 2026–2030. The allocation is based on their heat production and fuel consumption. This adjustment could result in approximately €8.25 billion in savings on carbon costs for these sectors.

Context: The Carbon Border Adjustment Mechanism (CBAM)

It is worth noting that the stated objective of the Carbon Border Adjustment Mechanism (CBAM) is to gradually phase out these same free quotas for European industries by 2034 to ensure fair competition. The EU’s decision to expand these temporary protections highlights the difficulty in weaning its industries off carbon subsidies.

Implications for Tunisia

For Tunisia, where the EU is the primary trading partner and which hosts sectors highly exposed to these regulations, this development underscores that European rules remain extremely strict and subject to change.

Tunisian industries exporting to Europe risk being doubly penalized:

1. By the increasing carbon tax at the EU borders.
2. By a lag in technological and energy competitiveness.

This situation reinforces the urgency for Tunisia to accelerate its energy transition. Doing so will help reduce the intrinsic carbon footprint of its products and minimize the amount of European customs duties related to the CBAM.

Note: The official price of a CBAM certificate is set at €75.28 per tonne of CO₂ for the second quarter of 2026—a significant financial consideration for exporters.