By Corning Painter
When I think about sustainability, one of the top issues on my mind this year has been the EU’s Emissions Trading System (ETS). The climate policy, established in 2005, aims to get factories and power plants to gradually decarbonize by increasing the price they pay for their carbon emissions.
The cap-and-trade program requires companies to purchase permits to cover their emissions of carbon dioxide, or CO₂. Although businesses receive a limited number of free allowances each year to cushion the burden, industry allowance thresholds are being phased out, provoking a backlash from companies and some politicians.
For my industry, the ETS is significant because making carbon black is energy-intensive and generates emissions. So, the policy directly affects production costs and therefore local manufacturing competitiveness, compared with imported carbon black.
In recent months, amid intense debate in Europe, I’ve been encouraged to see that EU officials have engaged industry. Driving the engagement are serious concerns about Europe deindustrializing and becoming less competitive with the U.S., India and China. This has been especially impactful on the broader chemicals industry, where numerous crackers have shut down or are targeted for closure. This simply shifts emissions to other regions of the world.
When talking to some officials about the ETS, their message is clear: The carbon black industry should have done more to reduce emissions. I respectfully disagree with that assessment because it overlooks key challenges the industry faces.
I also question whether officials fully appreciate the ways our industry is already contributing to sustainability. Examples include developing circular products, converting waste heat to energy that benefits local communities and upcycling what would otherwise be waste material from the fossil fuels sector.
These topics are covered well in Orion’s latest Sustainability Report. But in this essay, I feel compelled to address regulatory challenges, like the ETS, that are threatening the viability of Europe’s industrial base.
Although I support the underlying goal that the ETS is intended to achieve, I contend the policy’s expectation for the carbon black industry overlooks at least three basic realities about chemistry and manufacturing.
Reality 1: CO₂ is a low-energy molecule.
CO₂ can be converted to useful products like methanol. But such processes demand significant energy, which often produces more CO₂. This is because CO₂ is a low-energy molecule. Any other molecule you convert CO₂ into will have more energy, which means additional heat is needed to make such a reaction happen. And using more heat usually means creating more CO₂.
Reality 2: Separating CO₂ means creating order, and that takes energy.
The second law of thermodynamics states that systems naturally move toward disorder, or “entropy.” For example, the gas coming out of a carbon black factory’s flue-gas stack is a disordered mix — mostly nitrogen mixed with less than 10% CO₂. To do anything useful with CO₂, such as converting it into another product or injecting it into an old gas field (a common carbon capture technology), it is useful, if not necessary, to isolate CO₂ from that mix. Any gas purification process would entail fighting entropy, in turn requiring a significant amount of energy. The more diluted the CO₂, the more difficult and expensive this process step becomes. And unless that required energy comes from renewable sources, the process will generate additional emissions, adding cost and complexity for the industry that producers in China and India are generally not burdened with.
Reality 3: Carbon trading conflicts with recycling and creating a circular economy
Carbon black can be made from circular feedstocks, which can be derived from end-of-life tires. Using this feedstock supports a circular economy, diminishes the use of fossil raw materials and consequently reduces emissions along the carbon black value chain. But the ETS doesn’t distinguish between virgin feedstocks and circular feedstocks, so these efforts are not recognized. This, in turn, discourages recycling and innovation that could otherwise lower the industry’s effective carbon footprint.
Beyond chemistry: The cost to consumers
Capturing or converting CO₂ is expensive. Using old tires costs money, too. Consumers today are feeling economic pressures and are focused on price. When shopping for tires, they currently care more about cost, and not about other attributes like quality and durability, let alone sustainability.
This puts tire producers and carbon black makers in Europe under pressure from low-value imports that do not have carbon trading costs, and are typically produced with lower, and sometimes subsidized, labor or other costs.
Some may say that the EU’s Carbon Border Adjustment Mechanism (CBAM) could provide protection for carbon black. The policy is designed to put a fair price on carbon emissions embedded in certain goods imported into the EU. However, others have warned that success with CBAM is not guaranteed.
I hope the EU will choose a sensible path – one more based on science. There are ways to transition manufacturing toward sustainability with innovation coupled with incentives, as well as more judicious trade policies. The EU’s current policy will simply result in European manufacturing being replaced by production in India and China. This will not help the environment, and it will make the EU more dependent on imports for essential raw materials, such as carbon black.
(Corning Painter is the CEO of Orion S.A. This essay was originally published as the “CEO Letter” in Orion’s 2025 Sustainability Report.)
