Report: ETS Could Become Dramatically More Expensive and Weaken EU Competitiveness

A new report from the Warsaw Enterprise Institute warns that the European emissions trading system (ETS) is placing increasing economic strain on the EU economy. Rising energy prices and declining industrial competitiveness are the main concerns. The report finds that the system could weaken Europe's position relative to the US and China.

The Warsaw Enterprise Institute has released a report titled "In Search of an Optimal Climate Policy," which draws attention to the growing economic burden of the European emissions trading system (ETS). According to the report, the ETS is becoming increasingly burdensome for European industry and consumers, and its costs could rise dramatically in the coming years.

One of the main concerns is rising energy prices, which directly affect both manufacturing companies and ordinary citizens. Higher energy costs increase production costs, which in turn reduces the competitiveness of European industry on the global market. The report emphasizes that this process is already underway and is accelerating due to the ETS pricing mechanisms.

The report highlights a separate risk that the European Union could lose its competitive advantage compared to the US and China, where similar carbon taxes are not applied at the same level. As a result, production could shift away from Europe, which neither helps reduce global emissions nor benefits the European economy, a phenomenon known as carbon leakage.

The Warsaw Enterprise Institute is a Poland-based think tank that has previously criticized the EU's climate and energy policies using economic arguments. The report calls on policymakers to seek a more balanced approach that takes into account both climate objectives and the economic burden on industry and consumers.