ERCST

2025 ERCST Feedback to the EU Commission public Consultation on the Industrial Decarbonisation Accelerator Act (IDAA) Authors Andrei Marcu, Chiara Cavallera 1. Introduction In February 2025, the European Commission published the Communication on the Clean Industrial Deal. One of the initiatives highlighted in Communication is the Industrial Decarbonisation Accelerator Act.

Opening of the attached position paper · the full paper is on the Commission’s record (source link above)

The CBAM as proposed is pragmatic – a sensible approach given the political and economic challenges facing the EU. It shows the art of the possible and is a tool to get the EU to a high universal carbon price. The two critical issues that will be central in the ensuing political debate are the pace at which free allocation is removed without having had an opportunity to test the CBAM under real world conditions, and…

The stated aim of the initiative is to tackle asymmetrical climate ambition between the EU and its trade partners which may result in carbon leakage. Carbon leakage is defined in the Inception Impact Assessment (IIA) as the transfer of production and investment to countries with lower climate ambition and/or the replacement of EU products with more carbon intensive ones from outside the EU.

The European Roundtable on Climate Change and Sustainable Transition (ERCST) welcomes the opportunity to provide feedback on the European Commission’s Inception Impact Assessment for the Revision of the EU Emissions Trading System (EU ETS).

The focus of the feedback to the Inception Impact Assessment (IIA) is the revision of the Energy Taxation Directive 2003/96, which outlines the EU rules for the taxation of electricity and energy products used as heating or motor fuels.

2025 In considering what the EU target for 2040 should be what is a needed is a disciplined and hard approach to reviewing, and implementing, corrections to adapt the existing framework to the changed global socioeconomic realities. This is an important moment for the EU and the world.

Opening of the attached position paper · the full paper is on the Commission’s record (source link above)

Previous work by ERCST on Crediting Carbon Prices under the CBAM (see link: https://ercst.org/crediting-carbon-prices-under-the-cbam/) has laid important groundwork in exploring how carbon pricing and crediting might interact under the Carbon Border Adjustment Mechanism. However, in light of recent developments, two key points merit further discussion: carbon credits and compensation mechanisms.

Net Zero Industry Act feedback The Net Zero Industry Act (NZIA) is seen by many stakeholders as a EU response to the IRA, to help fill gaps that go beyond the carbon leakage mandate of the EU ETS & CBAM, and address broader issues such as industrial competitiveness, value chain vulnerabilities, etc.

Opening of the attached position paper · the full paper is on the Commission’s record (source link above)

The proposed hydrogen and decarbonized gas package outlines a vision to decrease emissions in the gas sector. The fundamental view should be that technology neutral market driven approaches are the first choice, with other policies and measures to be considered only if there are compelling reasons.

By de facto focusing only on pure electrification, the Regulation has forced the EU industry to compete in sectors where it does not enjoy a comparative advantage. This has led to inefficient decarbonisation and unintended deindustrialization in the EU auto sector.

European Roundtable on Climate Change and Sustainable Transition was heavily involved in the just transition discussion before and after Paris Agreement. Especially when it comes to managing a sustainable transition to a low-carbon economy and its distributional aspects. The feedback is attached.

The fundamental view should be that technology neutral market driven approaches are the first choice, with other policies and measures to be considered only if there are compelling reasons. Given the level of state intervention in the economy through the EGD and the Fit for 55 package, any additional intervention should need to be carefully weighted and considered.