Energy and ETS. Concrete measures urgently needed to relaunch the ceramic industry

The event was attended by more than 300 people and addressed one of the most pressing challenges facing the local ceramic industry, namely the growing impact of energy costs and the EU Emissions Trading System (ETS) on business competitiveness, with serious implications for employment and the local economy.

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Following opening remarks from the Rector of UNIMORE Carlo Adolfo Porro, the Mayor of Sassuolo Matteo Mesini, Confindustria Ceramica Chairman Augusto Ciarrocchi and Italian Environment Minister Gilberto Pichetto Fratin (via a video message), the Vice-Rector of UNIMORE Gianluca Marchi discussed the importance of the ceramic industry in the local area and its critical challenges.

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The ceramic tile industry accounts for 11.6% of manufacturing added value and 7.5% of employment of the entire provinces of Modena and Reggio Emilia, figures well above both the regional and national averages. In 2023, the Sassuolo district accounted for 85.5% of Italy’s entire national ceramic tile output, thanks to its 14,350 direct employees and continuous investment in product and technological innovation. The Italian ceramic supply chain, which employs around 40,000 people, is highly integrated and displays a high level of capitalisation across all its segments. However, since 2024 it has seen a decline in investment, a warning sign for the entire sector that coincides with rising costs for the purchase of ETS allowances for ceramic companies.

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Davide Tabarelli, Chairman of Nomisma Energia, discussed the distortions present in the ETS system and the Carbon Border Adjustment Mechanism (CBAM). The ETS is increasingly influenced by financial speculation, he explained, while the CBAM, which was specially introduced to address these issues, remains ineffective. The ETS system adopted in Europe, which accounts for just 6% of global emissions, is imposing ambitious targets without fully considering the technological feasibility for the industries concerned. As a result, strategic sectors like ceramics, which is responsible for only 1.9% of Italy’s emissions, are being penalised. The system already imposes additional annual costs of around €120 million on the sector, and the situation is expected to worsen, placing new burdens on businesses already penalised by rising energy costs. To safeguard the sector’s competitiveness, Tabarelli called for an immediate halt to the reduction of free allowances, the creation of a mechanism to protect exports, and the activation of compensation for indirect ETS costs as is already available for other sectors. He also stressed the need to increase the domestic gas supply and highlighted the disparity in gas prices compared to major EU and non-EU competitors.

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In the first panel discussion, moderated by journalist Ilaria Vesentini, MEP Stefano Cavedagna pointed out that EU green policies are often heavily influenced by ideological positions. Regarding both the tariffs on Indian tile imports (“a 6% tariff has had zero effect”, he said) and the ETS (“it would be good to know where the resources generated by the additional costs sustained by companies are being reinvested”), he claimed that a number of EU countries with a greater focus on services than on manufacturing are pushing for sustainability targets that are simply unattainable. Compensation mechanisms, he concluded, are essential for keeping manufacturing in Europe.

MEP Giorgio Gori, rapporteur for the resolution on energy-intensive industries, noted that the Commission has been asked to implement measures for the gas market, including aggregated gas purchases through stable, transparent contracts and a review of the Market Stability Reserve, which currently acts as a price multiplier. “The public sector accounts for 14% of EU GDP and can play a leading role in enhancing corporate investment,” he said. “Unlike in Germany, which has allocated €50 billion in public funds to offset industrial energy costs, Italy does not channel surplus revenues back into its businesses.”

MEP Massimiliano Salini reiterated the need to adjust the compensation mechanisms for indirect ETS costs, including the CBAM from which the ceramic sector is currently excluded. “The ETS has already damaged the ceramic industry, as evidenced by the slowdown in investment in recent years. Its objectives must be preserved, but the system itself needs a radical overhaul. Europe simply cannot afford the ETS in its current form if it wants to keep industrial production competitive and sustainable. Otherwise, there is a risk of companies relocating and jobs being lost.”

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In the second panel discussion, Emilia-Romagna Vice President Vincenzo Colla outlined initiatives introduced to support the regional economy, including trials of small nuclear reactors, natural gas storage in Minerbio and the Ravenna regasification terminal. “We face a serious risk of geoeconomic erosion that threatens business freedom,” he said. “Financial speculation must be eliminated from the ETS, and the hydroelectric concessions decree should allocate a share of generated energy to energy-intensive industries.”

“Energy costs risk killing businesses,” warned Antonio Gozzi, Special Advisor to Confindustria. “The ceramic industry is an emblematic case, an outstanding industrial sector penalised by convoluted EU rules that exclude it from ETS system compensation. After 23 years, the ETS needs a thorough overhaul and raises questions about the legitimacy of a European bureaucratic system that continues to undermine the competitiveness of its own industry without any real cost-benefit analysis of EU hyper-regulation.” The conference provided an opportunity to exchange views with various MEPs and local administrators. In particular, Vincenzo Colla, Vice-President of the Emilia-Romagna Region with responsibility for economic development and the green economy, supported the regional government’s decision to reserve a share of hydroelectric power – for which concessions are long overdue for renewal – for energy-intensive businesses. “This is a concrete example of a responsible industrial policy that should be replicated at a national level,” he said.

Franco Manfredini, Chairman of the Energy Commission at Confindustria Ceramica, stressed that “energy is the real problem” for Italian industry, particularly in the ceramic sector where it accounts for a third of companies’ industrial costs. This in itself is a very high value, but is exacerbated by the price gap with respect to European and non-European competitors. While the ETS was conceived to guide the economy toward decarbonisation, it includes safeguard clauses in the event economic survival is threatened. “We can’t wait any longer. Exemptions must be introduced for industries like ceramics that have already invested in best available technologies.”

Closing the conference, Deputy Minister for Enterprise and Made in Italy Valentino Valentini noted that Italy is Europe’s second-largest manufacturing economy but not its second-largest energy producer. “The events of the past three years have forced us to rethink our energy mix. The Green Deal is the right way forward, but its timelines and implementation strategies need to be reviewed. Ceramics is a strategic Italian industry and must be protected, for example, through energy release system quotas, while we wait for structural reforms to European energy mechanisms.”

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