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EU ETS: from Carbon Price to Investment Certainty

Posted on: 04 February 2026

Bade Kizilaslan, Communications Manager, Cement Europe

The EU Emissions Trading System (EU ETS) has been at the heart of Europe’s climate policy for two decades. It has helped drive emissions reductions across industry and power generation and remains a cornerstone of the EU’s pathway towards climate neutrality. This is why Cement Europe supports the EU ETS as a central, market-based instrument to reduce emissions and drive industrial transformation.

As discussions around the future of the EU ETS intensify in 2026, the focus is increasingly shifting from ambition to delivery. For sectors like cement, the key question is whether the ETS can continue to provide the clear, predictable investment framework needed to deploy low-carbon solutions at scale in Europe.

A system facing new expectations

The European cement industry supports Europe’s climate objectives and has already delivered significant emissions reductions. It is now building on this progress by continuing to invest in and deploy decarbonisation solutions, including carbon capture and storage, electrification and the widespread use of alternative fuels.

Cement is, by nature, a hard-to-abate sector. Around 60% of its emissions are process-related and cannot be eliminated through efficiency improvements alone. Deep decarbonisation therefore depends on long-term, capital-intensive investments, often with lead times measured in decades.

In this context, regulatory predictability under the EU ETS has become more important than ever for maintaining its role as an effective incentive for decarbonisation investment.

Frequent rule changes, delayed benchmark-setting and limited visibility on post-2030 and post-2040 parameters make it harder to take final investment decisions. For projects that anchor industrial activity and jobs locally, uncertainty is not simply a technical issue; it directly affects whether investments are made in Europe.

From price signal to investment enabler

The EU ETS was designed to put a price on carbon emissions released into the atmosphere. That core principle remains valid and has proven effective in driving emissions reductions. Today, the system is also expected to function as an enabler of long-term investment.

For the cement sector, this means:

timely and transparent benchmark-setting,
clarity on how unavoidable residual emissions will be addressed,
a coherent framework for carbon capture, storage and removals,
and a credible outlook beyond 2040.

Providing this clarity would allow the EU ETS to fully play its role as a trusted framework in supporting the deployment of low-carbon technologies, rather than creating uncertainty at the very moment when investment decisions are being taken.

Why this matters beyond climate policy

Cement is a local industry by nature. It underpins Europe’s infrastructure, from transport and housing to energy systems and defence-related projects.

Unlike many other products, cement cannot be easily relocated without consequences for supply security and resilience.

Ensuring that low-carbon cement continues to be produced in Europe is therefore not only a climate objective. It is also about maintaining Europe’s strategic autonomy, preserving local value chains and ensuring that critical infrastructure is built under EU standards.

Predictability under the EU ETS directly influences whether these investments happen locally. A stable and credible framework supports investment in European plants and supply chains. Uncertainty, by contrast, risks increasing reliance on imports for a material that is essential to Europe’s economy and security.

Recognising the reality of hard-to-abate sectors

As the ETS cap tightens towards zero around 2039–2040, an essential question must be addressed: how can the system accommodate sectors with unavoidable process emissions while maintaining environmental integrity?

The European cement industry is not asking for exemptions from climate policy. It is asking for a framework that recognises physical realities and supports the roll-out of solutions such as carbon capture and storage, which are central to the sector’s pathway to climate neutrality.

Getting this right is critical to avoid unintended consequences. Without a credible pathway, there is a risk that production and investment shift outside Europe, undermining both climate objectives and industrial resilience.

EU ETS and CBAM: two sides of the same equation

The EU ETS does not operate in isolation. Its effectiveness is closely linked to the Carbon Border Adjustment Mechanism (CBAM), which entered its full application phase just this year, in 2026.

Together, the EU ETS and CBAM are designed to ensure that decarbonisation happens in Europe, under EU standards, rather than being outsourced. Watertight implementation of CBAM and a strong and predictable EU ETS are essential to this logic, providing the carbon price signal underpins both instruments.

A stable EU ETS is therefore essential for CBAM to deliver a genuine level playing field and support investment in low-carbon cement production in Europe.

Turning ambition into delivery

Europe’s challenge is not to choose between climate ambition and industrial strength, but to align the two. The cement industry is a long-term partner in delivering Europe’s climate transition, by investing in low-carbon technologies and contributing to resilient, sustainable infrastructure.

The discussions taking place in 2026 represent an important opportunity. With the right balance, the EU ETS can continue to deliver emissions reductions while providing the investment certainty needed to deploy solutions in a sector that is essential to Europe’s economy, resilience and strategic autonomy.

The choices made now will shape not only the future of the EU ETS, but also Europe’s ability to decarbonise its industry while keeping production, jobs and value chains local.

EU ETS: from Carbon Price to Investment Certainty

For the cement sector, this means:

timely and transparent benchmark-setting,

clarity on how unavoidable residual emissions will be addressed,

a coherent framework for carbon capture, storage and removals,

and a credible outlook beyond 2040.