ETS Truther: #CementGirlSummer... On our way to Brussels: Rerating ahead, irrespective of ETS outcome

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ETS Truther: #CementGirlSummer... On our way to Brussels: Rerating ahead, irrespective of ETS outcome

16 July 2026

European Construction & Building Materials

ETS Truther: #CementGirlSummer... On our way to Brussels:

Rerating ahead, irrespective of ETS outcome

European cement stocks have derated this year amid fears of a weakened ETS and the war. Pujarini Ghosh, CFA

+44 20 7676 6807 With the European Commission set to publish its ETS reform proposal tomorrow (17 July),

pujarini.ghosh@bernsteinsg.com investor concerns around lower carbon prices and permanently impaired pricing power which

have driven the significant underperformance, should alleviate. This should drive rerating of

Victor Acitores the sector, in the short term, reinforcing our OP ratings on Holcim, Heidelberg and CRH.

+34 915 893 901

victor.acitores@bernsteinsg.com

The market is significantly underestimating future pricing power. Finalization of

Tobias Fromme the new ETS benchmarks already de-risk 2026-30, and our base case assumption is

+44 20 7676 6875 no policy change till 2030 with potential extension of free allowances until 2039 from

tobias.fromme@bernsteinsg.com 2034 previously. However, even under a more accommodative ETS framework, carbon

costs will rise materially as free allocations decrease. Our analysis suggests cement prices

Specialist Sales would need to increase at ~3-5% CAGR through 2030 simply to pass carbon costs, under

Sara Bellenda different scenarios. Including underlying production cost inflation of ~2-3% implies mid-

+44 20 7762 1867 to-high single-digit pricing potential over the long term. Importantly, sensitivity analysis

sara.bellenda@bernsteinsg.com

shows that even if carbon prices remain range-bound ~€70-80/t, pricing requirements