By John Ainger | Updated on Oct 05, 2026 at 12:30 PM
France and Germany are leading a push to force the European Union to come up with a better way of protecting exporters against tightening rules on carbon dioxide emissions.
The countries will press the European Commission, the bloc’s executive branch, to propose a solution that will help prevent industries moving away from the region as it tightens climate rules, according to a draft document seen by Bloomberg News. The push is set to draw widespread support, including from other big economies like Spain and Italy.
Over the next decade, the EU is phasing out a system of free emissions allowances under its carbon market, meaning that heavy industries will have to pay for the CO2 they release into the atmosphere. While the bloc is also implementing a so-called carbon border levy to ensure that imports are subject to the same costs, there are concerns that exports by European companies will be insufficiently protected.
“The gradual increase in carbon costs for EU producers, if left uncompensated, risks undermining EU competitiveness in third-country markets and may lead to carbon leakage,” the document says. “It therefore requires a European solution.”
Read more: Deep Divisions Mark Start of EU Carbon Market Reform Talks
The latest initiative comes as EU nations and the bloc’s parliament negotiate a reform of the Emissions Trading System put forward by the commission in July. Climate ministers are set to debate the planned changes at a meeting in Luxembourg on Oct. 12, before leaders from the 27 member states meet in Brussels later in the week.
The EU has so far taken limited action. A temporary decarbonization fund announced in December last year provides a partial stopgap solution over two years. Other potential measures have been dismissed due to concerns they would run foul of World Trade Organization rules.
Spokespeople from France and Germany didn’t immediately respond to a request for comment.