German Energy-Intensive Industries Face CBAM Transition Amid Crisis in NRW Chemical Sector
Germany prepares full implementation of the EU's CBAM to shield energy-intensive sectors amid a deep crisis in NRW's chemical industry caused by energy costs and CO2 tax policies.
- • Full CBAM implementation set for January 1, 2026, with transitional phase since October 2023.
- • About 90% of companies exempted under new CBAM rules, covering 99% of emissions.
- • NRW chemical sector faces plant closures and job losses due to high energy costs and CO2 taxes.
- • Industry leaders urge government intervention and competitive energy pricing to protect jobs.
- • Chancellor Merz commits to improving investment conditions amid industrial challenges.
Key details
Germany is gearing up to implement the EU's Carbon Border Adjustment Mechanism (CBAM) fully by January 1, 2026, aiming to protect energy-intensive sectors such as aluminum and steel from imports associated with weaker climate regulations. This initiative, currently in a transitional phase since October 2023, is designed to complement the EU Emissions Trading System (EU-ETS) by leveling the playing field for European producers through equivalent CO2 pricing on imported goods. According to the Federal Environment Ministry, about 90% of affected companies, particularly smaller importers, will be exempt from CBAM obligations while still covering 99% of emissions linked to major import volumes. The German Emissions Trading Authority (DEHSt) is responsible for enforcement, and new simplifications facilitate emissions reporting and importing processes, aiming to minimize bureaucracy without compromising environmental goals (Research Item 113442).
However, while the regulatory framework evolves, German industry faces acute challenges, especially in North Rhine-Westphalia (NRW), the country's largest chemical industry hub. Here, escalating energy costs and stringent European CO2 tax policies have led to significant industrial contraction. Ineos has announced the closure of two chemical plants in Wesel, affecting 175 jobs, adding to prior shutdowns in the region. Furthermore, BP plans to sell its Ruhr Oel refinery in Gelsenkirchen, which currently employs over 2,200 workers. The Industrial Union for Mining, Chemistry and Energy (IGBCE) warns that these developments jeopardize the stability of Germany as a manufacturing center. IGBCE leader Michael Vassiliadis called for governmental intervention to ensure competitive energy prices and reform emissions trading to safeguard jobs and the regional economy. Ineos Inovyn’s CEO Stephen Dossett criticized European policies, stating that the continent risks “industrial suicide” by failing to shield its manufacturers from lower-cost imports, especially from Asia. Chancellor Friedrich Merz acknowledged these challenges and pledged improvements in investment conditions to support the industrial base (Research Item 113446).
While the CBAM aims to foster climate-friendly investments and maintain fair international trade, the industrial sector’s acute crisis in NRW reveals the delicate balance between environmental ambitions and economic viability. Bundesumweltminister Carsten Schneider highlighted the mechanism's importance for maintaining competitiveness and advancing climate technologies, urging ongoing monitoring to protect German industry in the global marketplace. UBA President Dirk Messner welcomes the reduced bureaucratic hurdles, ensuring that climate goals remain intact as German companies navigate this complex transition.