BASF CEO Martin Brudermühler has issued a stark warning that the European Union's planned overhaul of its Emissions Trading System (ETS) could impose crippling costs on heavy industry, urging immediate reform to avoid economic damage. The EU's current ETS, established in 2005, sets a cap on carbon emissions and requires companies to buy permits for each ton of CO2 they emit. Brudermühler's primary concern centers on the phaseout of free allocation of these permits, which would force manufacturers like BASF to purchase allowances at market prices. This shift, scheduled for implementation in 2027, threatens to make EU operations prohibitively expensive compared to competitors outside the bloc, potentially triggering factory relocations and job losses.

The warning underscores a critical tension between environmental goals and industrial competitiveness, with Brudermühler advocating for a more gradual transition that maintains some free allocation for energy-intensive sectors. The implications extend beyond BASF, signaling a potential industry-wide crisis if the EU proceeds without significant concessions.