20 July 2026 – Brussels is selling its latest ETS proposal as a reform for competitiveness and industrial investment. Yet the proposal contains no simplification. Instead, it adds another layer of funds, investment conditions, reporting obligations, and national subsidy programs on top of the already opaque ETS and CBAM rules. Germany: the electricity price as a permanent excuse, but is the power socket really the problem?
EU ETS Reform: How the Commission Protects Big Companies’ Balance Sheets
Brussels is selling its latest ETS proposal as a reform for competitiveness and industrial investment. But anyone who reads COM(2026) 616 finds something else: no simplification, but an additional layer of funds, investment conditions, reporting obligations, and national subsidy programs stacked on top of the already opaque ETS and CBAM rules. The burden is shifting from certificate prices to subsidy bureaucracy. Nothing is becoming simpler.
Who Wins the Paperwork War?
This is explicitly not a reform for small and medium-sized enterprises (SME). The EU ETS proposal is aimed at large, energy-intensive installations. SMEs appear in the funding programs but receive neither exemptions nor binding reserved quotas.
Anyone capable of handling decarbonization plans, emissions documentation, and applications worth millions needs legal, funding, and sustainability departments. Large corporations have them. A supplier from Saarland or the Sauerland does not.
The costs are passed on to downstream businesses through electricity, steel, and financing prices, without any automatic compensation.
The Silent Scandal: Historic Certificate Stocks
What is truly remarkable is what the proposal leaves out. Free allocation for CBAM sectors is extended until 2038, pushing the phase-out further into the future. At the same time, the certificate surpluses accumulated by the steel industry over many years remain completely untouched. They are not withdrawn, frozen, or offset against future allocations.
Companies may continue to sell their historic stocks, hold them, or use them to cover future emissions. New investment conditions apply only to future allocations. The past remains profitable.
This creates a very real liquidity asymmetry. A European producer can meet current obligations using certificates previously received free of charge. An importer must provide capital in advance for CBAM certificates. Protection on one side, the bill on the other.
Saarstahl and Its Proximity to the Public Purse
Hardly any case illustrates the mechanism more clearly than SPD-governed Saarland. Saarstahl and Dillinger are investing EUR 4.6 billion in converting to hydrogen, of which EUR 2.6 billion comes from the federal and state governments. Group CEO Stefan Rauber (former managing director of the Saarland SPD parliamentary group and former head of Heiko Maas’s office) promptly warns against any weakening of emissions trading because it would make the subsidized transformation less attractive.
Saarstahl has no objection to steel tariffs, either. Quite the opposite. The fact that a major producer participating in the ETS since 2005 is itself likely to have accumulated substantial surplus certificates remains unmentioned in the public complaints about costs.
Historic surpluses, extended free allocation, ETS-financed subsidies, CBAM border protection, and steel tariffs on top: a single company can benefit from five instruments simultaneously, while SMEs pays the bill through higher purchasing prices.
The economic damage caused by this permanent tinkering with rules that are already far too complex is considerable, while the environmental benefit remains doubtful. An honest reform would not consist of yet another fund, but of transparency regarding historic certificate stocks and their offsetting against future allocations. That is precisely what Brussels avoids. Better to make the system even more complex than to finally abolish a failed system.
Germany: The Electricity Price as a Permanent Excuse
Few complaints are as reliable as those of major steel producers about supposedly excessive energy costs. Saarstahl also cites allegedly excessive domestic energy costs as a burden in the risk report of its 2025 annual report. The figures tell a different story.
Industrial Electricity Prices in 2026 Are Back at 2014 Levels
At around 16.7 cents per kWh, the industrial electricity price in 2026 is practically back at its 2014 level. The 2022 spike has been reversed. Adjusted for inflation, industrial electricity is even cheaper today than it was ten years ago, according to calculations by ntv citing Harro Heilmann, a professor of production economics in Aalen.
His argument is that electricity prices serve as a scapegoat for self-inflicted mistakes.
The Power Socket Is Not the Problem
For steel producers, this means that the power socket is not the problem. The real problems are European overcapacity and a multi-billion-euro, subsidy-dependent gamble on hydrogen.
Anyone who permanently demands protection and subsidies should stop using electricity prices as an excuse. This is further evidence that large associations such as EUROFER make false claims, or at least frame the facts in a way that could lead people to conclude that Europe’s industrial electricity prices are far too high.
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