EU reforms intensify industry’s fight for protection amid energy transition challenges

According to a report published by Energia RP, Europe’s attempts to shield industry from volatile and rising energy costs remain uneven, leaving energy‑intensive sectors , notably fertiliser producer Grupa Azoty , exposed as the EU’s carbon price and border adjustment policy architecture evolves.

The report, drawing on analysis by the Forum Odbiorców Energii Elektrycznej i Gazu (FOEEiG), warns that the combined impact of the EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM) could hollow out competitiveness unless policy design couples ambitious climate targets with realistic, timely compensation and transitional safeguards. Grupa Azoty told Energia RP that “the introduction of ambitious climate goals must go hand in hand with economic realism and protection of our competitiveness,” warning that the green transition must not lead to production shifting outside the EU. The company urged preservation of free ETS allowances for sectors covered from 1 January 2026 by CBAM and called for urgent changes in Polish rules so fertiliser producers can claim due compensation for indirect emission costs for 2025.

FOEEiG recommends Poland press for broader options in the upcoming 2026 EU ETS revision, including allowing certain sectors to use carbon credits to offset obligations. The forum also urges Warsaw to build a coalition with other industrially intensive member states , Germany, France and Italy among them , to defend mechanisms that limit carbon leakage. It argues that Poland should seek enhanced compensatory flows for lower‑income member states after 2030 through instruments such as the Modernisation Fund and the Innovation Fund and secure a fair geographic allocation of all EU decarbonisation finance, including from the proposed European Competitiveness Fund.

Brussels has begun to respond: in its December 2025 update to state‑aid guidance under the EU ETS, the European Commission proposed expanding the list of sectors eligible for compensation of indirect emission costs by 20 sectors and two subsectors, covering activities from organic chemical production to parts of the ceramic, glass and battery value chains. FOEEiG suggests that such expanded compensation should remain available to sectors within CBAM until it demonstrably equalises the competitive position of non‑EU producers.

Poland has already put national measures in place and amended its rules. The Ministry of Development and Technology has highlighted past legislation designed to compensate energy‑intensive industries, noting that support for early years commenced with payouts covering 2019 and that the mechanism mirrors actions taken by a swathe of EU states. Government statements and regulatory statistics underline the scale of support: the Energy Regulatory Office (URE) confirmed nearly 900 million zloty in compensation for 2019 and reported that compensation paid to energy‑intensive industries reached about 2.92 billion zloty for 2024 , the largest annual sum since the scheme began , with cumulative assistance over six years exceeding 9.25 billion zloty.

Yet oversight bodies and auditors signal persistent deficiencies. The Supreme Audit Office (NIK) found that Poland was the last EU member to implement the 2012 Commission guidance on compensation and that the national scheme’s design did not fully protect firms’ competitiveness. NIK reported weak monitoring and coordination by the Ministry of Development and Technology and said total disbursements between 2020 and 2023 were substantially below planned levels.

In response to EU guidance and these criticisms, the government has revised its compensation framework to bring calculations and reporting into closer alignment with Brussels’ expectations, introducing stricter transparency requirements and altered compensation formulas intended to better reflect actual indirect costs. The ministry said the amendments aim to enhance effectiveness and accountability; they will take effect once published in the official journal.

Beyond compensation, the FOEEiG report pushes for structural measures to stabilise energy costs for industry. It repeats a long‑standing industry demand to limit financial actors’ role in EUA trading and to restore the market’s commodity character so that allowances are transacted primarily by entities with compliance needs. Henryk Kaliś, president of the Forum, told Energia RP that current wholesale electricity pricing fully transmits variable fuel and EUA cost swings to consumers: “– Jest ona skutkiem stosowanej obecnie metody wyceny energii elektrycznej na rynku hurtowym, która w 100 proc. przenosi wahania cen kosztów zmiennych produkcji – paliw i uprawnień do emisji CO2 (EUA) na odbiorców końcowych –” He added bitterly: “– Niestety, z możliwości tej UE nigdy nie chciała i nie chce nadal skorzystać, woli wprowadzać rozwiązania być może potrzebne, ale niesprawdzone, niepewne i ryzykowne – kończy gorzko Kaliś dodając, że dla przemysłowych odbiorców energii elektrycznej, ważniejsze od ograniczenia zmienności cen EUA, jest redukcja ich wysokości, a instytucje finansowe windują te ceny, spekulując na tym rynku.”

The report also urges Warsaw to consider a national mechanism to cap energy prices for uncovered industrial users, potentially financed from rising state revenues generated by higher ETS auction yields. FOEEiG notes that Poland began exploring such options but that political momentum stalled following the disbanding of the Ministry of Industry.

European institutions are watching. A question lodged in the European Parliament in 2025 flagged the disproportionate energy cost burden borne by Central and Eastern European manufacturers, and asked whether the Commission would adjust compensation mechanisms to better reflect member states with slower renewable transitions and high industrial energy intensity.

For industrial decarbonisation strategists and corporate decision‑makers, the practical takeaway is clear: regulatory changes at EU and national level continue to reshape the business environment, but gaps in design, implementation and oversight leave material exposure for energy‑intensive firms. The interplay between free ETS allowances, expanded indirect cost compensation, CBAM transitional arrangements and national price‑mitigation tools will determine whether Europe’s energy transition preserves industrial capacity or accelerates offshoring. Industry advocates and auditors alike argue that timing and administrative detail , not only headline climate ambition , will decide the outcome.