Concerns about displacement of EU industrial activities to regions outside the EU with no equivalent carbon cost are continuing to hold back EU ETS reforms.
Sandbag has taken an in depth look at this issue in order to provide some context at this critical Trialogue stage of the ETS reform process, in our new report:The Carbon Leakage Conundrum: getting the EU ETS abatement investment signals right
The report explains:
- why/how free allocation increases to highly emitting sectors at the start of Phase 4
- why the on-going free allocation approach for address carbon leakage concerns is flawed
- what could be done better to avoid industrial activity displacement.