As the EU ETS review gets underway, the governor of the National Bank of Belgium has warned that a CO₂ price of €200 per tonne could severely undermine the competitiveness of European heavy industry, adding to mounting concerns over the impact of rising carbon costs on the bloc’s industrial base.

A report published in August found that a carbon price of around €200/t under the EU Emissions Trading System (EU ETS) could deliver roughly three-quarters of the emissions reductions needed by 2050, highlighting the central role carbon pricing could play in the EU’s long-term decarbonisation strategy.

But allowing carbon prices to reach the levels estimated to be necessary to decarbonise industry could come at a significant economic and political cost. A price of €200/t risks accelerating Europe’s deindustrialisation and fuelling support for far-right parties, the Belgian central bank governor warned, according to Montel News.

The governor also questioned the political credibility of the EU’s net-zero target, arguing that insisting on the goal while many doubt it can be achieved creates “cognitive dissonance” and ultimately erodes the credibility of the policy instruments intended to deliver it.

Speaking at the same event, Jan Dusík, director-general of the European Commission’s climate department, defended the EU’s climate agenda, saying that “climate policy must survive, because we want to survive in Europe.” He argued that weakening or abandoning the bloc’s climate ambitions would overlook their broader links to energy security, resilience and affordability.

The contrasting positions expose the dilemma facing Brussels as it reviews the EU ETS: how far carbon prices can rise in pursuit of climate neutrality before the economic and political costs begin to threaten Europe’s industrial base — and the transition itself.