Cement production is one of the largest and most carbon-intensive sectors in the European Union. The industry emits 114 megatonnes of carbon dioxide each year. To ensure the EU achieves climate neutrality well before 2050, it is necessary to drastically reduce emissions in the cement sector. The EU’s Emissions Trading System (EU ETS) is the key instrument for incentivising emissions reduction in energy-intensive sectors, such as cement, but it has been underperforming compared with its potential. The ongoing revision of the system is a crucial opportunity to strengthen the EU ETS and correct the flaws that have resulted in stagnating emissions and huge windfall profits in the cement sector over the past 10 years. This will require updating the current benchmarks to ensure they encourage the uptake of cleaner technologies and the circular use of this material, as well as implementing the proposed Carbon Border Adjustment Mechanism in such a way that triggers more investments in emissions reductions. It will also require raising and channelling more revenues to fund innovation to support the sector in its green transition.