A recent EU Commission proposal includes updating ETS benchmark values with almost the entirety of the pulp and paper industry facing reductions of 50%, the highest possible update rate.
June 16, 2026 (Press Release) - Like other manufacturing sectors and many national governments, the European pulp and paper industry has called on the European Commission to maintain the current EU Emissions Trading System (ETS) benchmark values for the 2026-2030 period. It could otherwise lose an annual EUR 1 billion in decarbonisation investments, warned Cepi (Confederation of European Paper Industries).
The European pulp and paper industry has a strategic advantage in supporting the EU's objective of climate neutrality by 2050. In 2023, the EU bioeconomy was valued at EUR 2.7 trillion, accounting for 5% of the EU's GDP, and is expected to grow rapidly, presenting a EUR 6.6 trillion opportunity globally, which will capitalise on divestments from fossil fuels but also materials. It is a rare industry where the EU still has a competitive advantage.
But a recent EU Commission proposal to adjust its key climate policy the EU ETS, discussed [June 15] at the EU Council, fails to consider this potential. It includes updating ETS benchmark values, with almost the entirety of the pulp and paper industry facing reductions of 50%, the highest possible update rate. Such adjustments, based on data from 2021-2022, fail to account for the unique challenges faced by energy-intensive industries amid soaring energy costs and geopolitical instability.
These also directly threaten the competitiveness of the European pulp and paper industry as companies outside of Europe do not face the same carbon costs. Recent reports show that 80% of global carbon cost is paid by European operators and consumers.
"Working with the EU ETS as an investment incentive, we have reduced greenhouse gas emissions by more than 50% since 2005," said Jori Ringman, Cepi Director General. "But the rest of the road to net zero emissions by 2050 will be harder, and the proposed benchmark reductions, based on now obsolete projections which do not reflect current market conditions, could make success almost impossible."
As they have long used the ETS mechanisms to finance investments, pulp and paper producers now call for 2021-2025 ETS benchmark values to be applied unchanged to the 2026-2030 period, to ensure continued progress toward decarbonisation without compromising competitiveness of a sector that is key to the EU's post-fossil future.
Despite its success in cutting fossil energy sources, pulp and paper industry expects deeper industrial decarbonisation to require annual investments seven times larger than current ones. Problematically, the ETS as calibrated in the Commission's proposal risk doing the opposite, cutting EUR 1 billion out of the pulp and paper industry's annual investment capacity and resulting in extended payback periods. For instance, an investment exceeding EUR 250 million in a single mill to achieve 98% fossil-free production would, at a carbon price of EUR 70 per ton of CO?, yield annual savings of approximately €10 million, resulting in a payback period exceeding 25 years.
Furthermore, many pulp and paper installations rely on secondary biomass, the bio-based waste from papermaking, to produce heat. A 95% biomass threshold for exclusion from ETS already penalises early adopters by removing access to 'free allowances' needed to cushion previous investments, resulting in incentives for companies to potentially delay the transition away from fossil sources of energy.
Brussels-based Cepi is a non-profit association representing the paper industry in Europe. Cepi is managed by a 33-person Board and is composed of representatives of National Associations and Chief Executive Officers. The Board is currently chaired by Marco Eikelenboom, CEO of Sappi Europe.
SOURCE: Cepi