The European textile and apparel industry supports the European Union’s (EU) climate objectives and recognises the role of the Emissions Trading System (ETS) in reducing industrial emissions.
“However, the system must reward companies investing in decarbonisation rather than weaken their capacity to manufacture and compete in Europe,” EURATEX, the EU’s textile and apparel association said in a paper.
“Textile manufacturers are already investing in more efficient processes, but they face increasing energy, carbon and regulatory costs,” EURATEX added.
The ETS affects the sector both directly and indirectly. Companies operating combustion installations above 20 MW must purchase emission allowances, while other manufacturers face higher electricity prices as suppliers pass on ETS-related costs.
EURATEX has called for four key improvements. First, the current 20 MW threshold should be maintained.
Lowering it would bring many textile SMEs into a complex monitoring and reporting system. With 99% of the sector made up of SMEs, this would create disproportionate administrative costs.
Second, the textile industry’s indirect carbon costs must be better recognised. Textile production combines electricity-intensive processes, such as spinning, weaving and knitting, with heat-intensive activities including dyeing, drying and finishing.
EURATEX calls for a review of the ETS State Aid Guidelines and a simple compensation mechanism for companies exposed to significant indirect costs.
Third, a greater share of ETS revenues should be reinvested in the industries bearing the costs. EU-level guidance should encourage member states to support on-site decarbonisation projects, energy efficiency, cleaner technologies and alternative heat solutions.
Fourth, adequate free allocation must be maintained. Current heat and fuel benchmarks do not sufficiently reflect textile production processes or the limited availability of viable short-term alternatives.
Benchmark reductions should therefore be reviewed until realistic decarbonisation pathways are available.
Any future extension of the ETS should also depend on effective protection against carbon leakage.
The Carbon Border Adjustment Mechanism is not suitable for textiles because of the complexity of global value chains and the difficulty of calculating embedded emissions in finished products.
“Europe’s climate ambition must strengthen, not undermine, its industrial base. A successful ETS should support emissions reductions while protecting investment, jobs and production in Europe,” EURATEX concluded by saying.
EURATEX represents more than 200,000 companies and 1.2 million workers with annual exports of around €66 billion and imports of approximately €100 billion.
