The European pulp and paper industry is urging the European Commission to keep current EU Emissions Trading System (ETS) benchmark values unchanged for the 2026-2030 period. According to the Confederation of European Paper Industries (Cepi), the proposed revision could reduce the sector’s annual decarbonization investment capacity by nearly €1 billion.
The position comes just days after Cepi and other forest-based industry organizations called for a post-2030 climate framework that better reflects the role of the bioeconomy and Europe’s industrial competitiveness.
The request was made as EU member states review a European Commission proposal to update the benchmark values used to calculate free carbon allowances under the ETS.
According to Cepi, nearly all pulp and paper installations would be affected by a 50% reduction in benchmark values, the maximum adjustment rate allowed under the proposal. The organization argues that the revision relies on data from 2021 and 2022 and no longer reflects current market conditions, including high energy costs and ongoing geopolitical uncertainty.
A Competitiveness Challenge
The industry notes that it has long used ETS mechanisms to support investments aimed at reducing greenhouse gas emissions. Cepi is therefore calling for the benchmark values applied during the 2021-2025 period to remain unchanged through 2030.
According to the organization, the next phase of industrial decarbonization will be significantly more capital-intensive than previous efforts. The investments required to meet the sector’s climate targets are expected to be roughly seven times higher than current levels.
Cepi estimates that reducing free allocations would lower the investment capacity of European producers by approximately €1 billion annually. As an example, an investment of more than €250 million to bring a mill to 98% fossil-free energy use could require more than 25 years to pay back at a carbon price of €70 per tonne of CO₂.
Biomass Concerns
Cepi also raised concerns about ETS rules affecting mills that use secondary biomass generated from papermaking residues. According to the association, the current 95% biomass threshold required for ETS exclusion penalizes companies that have already invested in reducing fossil fuel consumption.
The industry further argues that European producers bear a disproportionate share of global carbon costs. Studies cited by Cepi indicate that 80% of carbon-related costs worldwide are currently paid by European businesses and consumers.
For Cepi Director General Jori Ringman, the ETS has played an important role in driving emissions reductions across the sector.
“Working with the EU ETS as an investment incentive, we have reduced greenhouse gas emissions by more than 50% since 2005. But the rest of the road to net zero emissions by 2050 will be harder, and the proposed benchmark reductions could make success almost impossible,” he said.
Cepi, the Confederation of European Paper Industries, represents the European pulp and paper sector through national industry associations across Europe. The organization advocates on issues related to climate policy, energy, competitiveness and the circular economy.
