German media report that industry representatives from the EU’s largest economy want free allocation to continue beyond 2034, when it is scheduled to end under the new Carbon Border Adjustment Mechanism.

During an event organized by the Federation of German Industries (BDI), the head of chemical giant BASF warned that the industry is facing “a major problem,” as “nobody will sell emissions allowances any more, everyone will be desperately looking for them.”

The CEO also criticized the new mechanism, which “would likely do little to protect European companies,” as quoted by Clean Energy Wire, adding that “it was unlikely that imported products would come with adequate reporting of their carbon footprint.”

Industry representatives also criticized other aspects of the current emissions trading system, including the price level. “If the CO₂ price is maintained in its current form, industry in Germany will no longer exist in this form,” Shell CEO Felix Faber said, as quoted by Frankfurter Rundschau.

Surprisingly, several German politicians have also come out in favor of extending free allocation. As reported by Bloomberg, in September Germany’s Christian Democrat economy minister Katherina Reiche said, “We must extend the free allocation. Otherwise, we will lose essential industries in our country.”

The German environment minister likewise called for issuing CO₂ allowances in the EU’s emissions trading system beyond 2039, when auctions are scheduled to end as the emissions cap reaches zero. “According to the current plan, the allocation of certificates will end in 2039; that is too soon,” Schneider said.

Austria has also joined Germany amid growing worries about the tightening of carbon trading rules. “Without an extension of the free certificates, there is a risk that value creation and emissions will simply be shifted because companies will be deprived of investment funds for the transformation,” said the Austrian economy and energy minister, as quoted by S&P Global.