Italy and the Czech Republic have proposed temporarily pausing the phase-out of free EU Emissions Trading System (ETS) allowances for sectors covered by the Carbon Border Adjustment Mechanism (CBAM), including cement.

A joint government paper dated 29 September and published on 30 September calls for additional flexibility for industries where commercially viable decarbonisation technologies remain limited or costly. It proposes reviewing sectoral allocation benchmarks and suspending further reductions in free allowances.

The governments also advocate reducing or temporarily suspending allowance withdrawals into the Market Stability Reserve. Approximately 190m allowances are scheduled to be withdrawn from auctions between September 2026 and August 2027, according to the paper.

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Further proposals seek to limit the impact of carbon costs on wholesale electricity prices. The package is intended to protect European industrial competitiveness amid high energy and fuel costs.

The measures remain proposals for consideration ahead of the October European Council. Any pause could affect cement producers’ carbon costs and decarbonisation investment decisions, although its duration and interaction with CBAM have not been specified.