The Industrial Schism: How RWE and the CDU are Fighting to Save the European Emissions Trading System

Introduction: An Unexpected Alliance

In the high-stakes world of European climate policy, the front lines are shifting in ways that would have been unthinkable a decade ago. A recent episode of the Klima-Labor podcast by ntv has pulled back the curtain on a dramatic internal struggle within the German industrial complex. At the heart of the story is a phone call that symbolizes the total realignment of corporate interests: the CEO of RWE, once the most formidable opponent of carbon pricing, calling a high-ranking politician to beg for the survival of the EU Emissions Trading System (ETS).

As Europe moves toward its 2030 climate targets, the consensus on how to reach them is fracturing—not between environmentalists and industry, but within industry itself. While some CEOs call for the dismantling of carbon markets to protect short-term margins, the titans of German energy and heavy industry are sounding the alarm, arguing that abolishing the ETS would be an act of "economic self-destruction."

1. Main Facts: The Great Carbon Realignment

The current conflict centers on the European Union Emissions Trading System (ETS), the cornerstone of the EU’s "Fit for 55" policy. The system operates on a "cap and trade" principle, where a ceiling is set on the total amount of greenhouse gases that can be emitted, and companies must buy or trade allowances for every ton of CO₂ they produce.

The Key Players:

• Peter Liese (CDU): A veteran Member of the European Parliament and a leading voice on environmental policy for the European People’s Party (EPP). He has become the primary mediator between the EU Commission and German industry.
• Christian Kullmann (CEO of Evonik): A vocal critic who recently branded the current CO₂ pricing system as "economic madness," sparking a firestorm within the German business community.
• RWE: Formerly Europe’s largest CO₂ emitter due to its lignite coal plants, the utility giant has pivoted to become one of the world’s largest renewable energy players.
• Heidelberg Materials: One of the world’s largest cement producers, which has bet billions on Carbon Capture and Storage (CCS) technology—a bet that only pays off if carbon prices remain high.

The central tension is clear: For companies that have already invested billions in green transitions, a high carbon price is no longer a "cost"—it is a "competitive moat" and a "guarantor of ROI" (Return on Investment). Conversely, for those lagging behind, the ETS is an existential threat.

2. Chronology: From Outrage to Reconciliation

The timeline of the current "industrial feud" reveals how quickly market stability can be rocked by political rhetoric.

October 2025: The Opening Salvo
Christian Kullmann, the head of the chemical giant Evonik, launched a public assault on the ETS. He argued that the rising costs of carbon allowances were hollowing out the German industrial base, leading to "deindustrialization" and "economic madness." He called for a complete suspension or abolition of the system to provide immediate relief to energy-intensive sectors.

The Immediate Fallout
The markets reacted with uncharacteristic volatility. Heidelberg Materials, which had positioned itself as a pioneer in climate-neutral construction, saw its stock price plummet. Investors feared that if Kullmann’s rhetoric gained political traction, the "green premium" on carbon-neutral products would vanish, rendering billions in investment worthless.

The RWE Intervention
Shortly after Kullmann’s comments, Peter Liese received a phone call from the CEO of RWE. The message was urgent: "We must save emissions trading." For Liese, the irony was profound. Fifteen years ago, RWE was the chief antagonist of the ETS. Today, with a portfolio dominated by wind, solar, and battery storage, RWE’s profitability is inextricably linked to a stable, high carbon price that makes fossil fuels uncompetitive.

2026: The Truce
After several high-level meetings between Liese and Kullmann, a fragile peace was brokered. Kullmann publicly walked back his demand for the abolition of the ETS, instead pivoting toward a call for "fundamental reform." In exchange, Liese and his colleagues in the EPP agreed to advocate for adjustments that would make the system more "practicable" for the "Mittelstand" (SMEs) and heavy industry.

3. Supporting Data: The Mechanics of the Carbon Market

To understand why the stakes are so high, one must look at the technical calibration of the ETS and the financial thresholds for green technology.

The Price Gap and CCS
Currently, the price of a CO₂ allowance in the EU fluctuates around €70 per ton. However, data from the Fraunhofer Institute suggests that many breakthrough technologies, particularly Carbon Capture and Storage (CCS) in the cement industry, only become commercially viable when the price reaches approximately €200 per ton. If the ETS is weakened or the price is artificially suppressed, these multi-billion-euro projects will never reach a Final Investment Decision (FID).

The Market Stability Reserve (MSR)
A major point of contention is the MSR, a mechanism designed to prevent the market from being flooded with excess certificates. Currently, if too many certificates accumulate in the reserve, they are permanently deleted.

• Liese’s Proposal: He argues that deleting these certificates is a "trap." If the economy surges and demand for energy rises, the lack of certificates causes prices to spike uncontrollably. He advocates for suspending the deletion of certificates, allowing the MSR to act as a genuine "buffer" that can release supply during economic peaks to stabilize prices.

The Burden on Process Emissions
For companies like Heidelberg Materials, the ETS is not just about energy; it is about "process emissions." When limestone is heated to create clinker (the basis of cement), CO₂ is released from the stone itself, regardless of the energy source used. Without a functioning ETS that recognizes and rewards CCS, there is no physical way for the cement industry to reach net zero.

4. Official Responses and Political Friction

The debate has exposed deep rifts within the German government and between Berlin and Brussels.

Criticism of the "ETS-2" Delay
The EU recently decided to delay the introduction of "ETS-2"—which covers heating and transport—until 2028. Peter Liese has labeled this a "grave mistake." He argues that Germany already has a national CO₂ price for these sectors. By moving to the European system, the price for German consumers and hauliers would actually likely decrease in the first year due to the broader market pool. By delaying, Liese claims, the government is depriving German companies of a competitive advantage.

Disappointment with Katherina Reiche
Liese also expressed sharp disappointment with Katherina Reiche, the high-profile executive and former State Secretary. Reiche, who was once seen as a bridge-builder between environmental needs and economic realities, has recently been viewed as siding with those who frame the ETS primarily as a "burden." Liese’s critique reflects a broader frustration within the CDU/EPP: the feeling that some political actors are playing to populist sentiments rather than sticking to the "ordoliberal" (market-based) principles of the carbon market.

The "Grumbling in the Stomach"
Even Liese, a staunch defender of the system, admits that the speed of the transition is daunting. He confessed to having a "gut feeling" of unease when Commission President Ursula von der Leyen announced the 55% reduction target for 2030. His philosophy is now one of "pragmatic preservation": keep the system, but ensure the reduction path is not so steep that it "breaks the machine."

5. Implications: Global Leverage and Investment Security

The outcome of this industrial "civil war" will have consequences far beyond Germany’s borders.

Geopolitical Heaver
Liese points out that the ETS is Europe’s most powerful geopolitical tool. By making adherence to Paris Climate Agreement goals a condition for trade deals (such as the Mercosur agreement), the EU uses its market size to force global compliance. If the EU were to dismantle its own carbon market, it would lose all credibility on the world stage, potentially triggering a "race to the bottom" in global climate standards.

The "Trump" Factor
With figures like Donald Trump signaling a total retreat from climate action, the EU’s commitment to the ETS becomes a matter of industrial sovereignty. If Europe can prove that a market-based carbon system creates a more efficient, technologically advanced industry, it will set the standard for the next century of global trade.

Impact on SMEs and Consumers
For the medium-sized trucking company or the local manufacturer, the message is one of "predictability." Those who have already invested in electric fleets or heat pumps rely on the carbon price to make their investment pay off compared to competitors still using diesel or gas. A sudden U-turn on the ETS would effectively "punish the pioneers" and reward those who refused to modernize.

Conclusion: The New Industrial Consensus

As 2026 unfolds, the "industrial zoff" (feud) over emissions trading appears to be resolving in favor of the reformers rather than the abolitionists. The intervention by the RWE CEO serves as a historical marker: it is the moment when the "old industry" finally recognized that its future depends on the very regulations it once fought.

The consensus emerging from the Klima-Labor is that the ETS is no longer just an environmental policy; it is the "operating system" of the European economy. While technical adjustments regarding the Market Stability Reserve and the recognition of CCS are necessary to prevent economic "overheating," the core of the system remains untouchable. As Peter Liese aptly summarized using a craftsman’s proverb: "Nach fest kommt ab" (After tight comes off). The goal is to keep the pressure on for decarbonization, but not so tight that the industrial fabric of Europe snaps.