Europaudvalget 2017-18
EUU Alm.del Bilag 371
Offentligt
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Methodological choices for determining the list of sectors and
subsectors deemed exposed to a significant risk of carbon
leakage, for the period 2021-2030
Fields marked with * are mandatory.
Methodological choices for determining the list of sectors and subsectors
deemed exposed to a significant risk of carbon leakage, for the period
2021-2030
In 2014, the European Council provided
strategic guidance
regarding the 2030 framework for climate and
energy and acknowledged the importance of the
EU Emission Trading System
(EU ETS) as the main
instrument to achieve the emission reduction targets of the EU. The European leaders determined that
free allocation to industry will continue after 2020 as long as no comparable efforts are undertaken in
other major economies.
Free allocation
is thus a transitional measure foreseen to address the risk of carbon leakage which is
defined as the risk of an increase in global emissions following relocation of industry due to climate
policies to third countries with no/limited carbon constraints.
The Commission with support of Member States will carry out an assessment of all relevant industry to
determine the level of exposure and thereafter draw up a so-called carbon leakage list. Sectors and sub-
sectors deemed to be most exposed to this risk receive a higher level of free allocation.
The framework for the carbon leakage assessment will be determined by the ETS Directive including the
criteria and thresholds for the assessments and the types of assessments possible with respective
conditions. These issues are thus not discussed in the present questionnaire, which instead focuses on a
number of aspects that have to be clarified before the exercise can be undertaken. The outstanding
issues are specific methodological choices: first for each of the two parameters of the assessment criteria
i.e. emission intensity and trade intensity, and second, on operationalising the different types of
assessments.
In this context, this consultation seeks the views of the stakeholders on the issues that remain to be
decided before the Commission can determine the carbon leakage list for the period 2021 to 2030. The
results of
this consultation
will be analysed, published and incorporated in the Impact Assessment that will
accompany the decision on the carbon leakage list.
Wherever possible, it would be useful if stakeholders provided references to concrete evidence and facts in
support of their answers.
Please note that the process of revising the ETS Directive is on-going and might, depending on the final
outcome, impact the questions presented in this questionnaire.
General information about respondent
*
Please choose your profile:
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Business
Trade association representing businesses
X
Government institution/regulatory authority
Academic/research institution
Non-governmental organisation
Citizen
Other
*
If other, please specify:
Text of 3 to 200 characters will be accepted
*
Please state which sector you are part of or represent:
100 character(s) maximum
Is your company an SME? (
What is an SME?
)
Yes - medium-sized enterprise (i.e. having less than 250 staff and/or turnover below €50m and/or
a balance sheet below €43m)
Yes - small enterprise (i.e. having less than 50 staff and/or turnover below €10m and/or a balance
sheet below €10m)
Yes - micro enterprise (i.e. having less than 10 staff and/or turnover below €2m and/or a balance
sheet below €2m)
No - large enterprise
I don’t know
*
Please give your name if replying as an individual/private person, otherwise give the name of your
organisation:
Text of 3 to 200 characters will be accepted
Danish Ministry of Energy, Utilities and Climate
If your organisation is registered in the
Transparency Register
, please give your Register ID number:
20 character(s) maximum
If your organisation is not registered, you can
register now
. Please note that contributions from
respondents who choose not to register will be processed as a separate category 'non-registered
organisations/business'.
Please enter your contact details (address, email):
500 character(s) maximum
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*
Please give your country of residence/establishment:
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
X
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Iceland
Norway
Other
*
If other, please specify:
Text of 3 to 200 characters will be accepted
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*
Please indicate your preference for the publication of your response on the Commission’s website:
(Please note that regardless of the option chosen, your contribution may be subject to a request for access
to documents under
Regulation 1049/2001
on public access to European Parliament, Council and
Commission documents. In this case the request will be assessed against the conditions set out in the
Regulation and in accordance with applicable
data protection rules
.)
X
Under the name given:
I consent to publication of all information in my contribution and I declare that none of it is subject
to copyright restrictions that prevent publication
Anonymously:
I consent to publication of all information in my contribution and I declare that none of it is subject
to copyright restrictions that prevent publication
I. General questions
This section includes general questions related to the carbon leakage list and free allocation.
Phase 3 of the EU Emission Trading System covers the period from 2013 until 2020 included and is
governed by harmonised
free allocation rules
and an
EU-wide limit on total emissions
, as well as specific
rules on addressing the risk of carbon leakage. What is your perception of the evolution of the risk of
carbon leakage since the beginning of phase 3 of the EU Emission Trading System in 2013?
Increased risk
Decreased risk
X
No significant change
I don't know
If you wish, please motivate your answer:
1000 character(s) maximum
Internationally there are opposite trends regarding climate policy. Emissions trading/mitigation efforts are
gaining pace in some third countries dominating EU-trade in energy intensive products such as China and
Korea. The Paris Agreement could likely facilitate further development in this area. At the same time, the
United States has announced its intention to withdraw from the Paris Agreement. Consequently, there
seems to be no significant change to the risk of carbon leakage currently.
However, it is difficult to predict future developments in this area. If the price of allowances in the EU ETS
increases in the future, this could impact the risk of carbon leakage, as the price of allowances could
constitute a larger share of total costs for sectors covered by the EU ETS.
The carbon leakage list and the higher level of free allocation granted to relevant sectors and sub-sectors
because of it, has been in place throughout phase 3 of the ETS. Please share your views on your
administrative experience with the system, in particular whether you see scope for reducing administrative
burden and/or simplification:
1000 character(s) maximum
The Danish Energy Agency is responsible for the administration of the carbon leakage list in Denmark.
To ensure correct administration and calculation of the free allocation, the primary task is distinguishing
between the `carbon leakage exposed´ and the `not carbon leakage exposed´ subinstallations when
calculating total amount of allocation.
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The Danish Energy Agency aims to ensure that this calculation is clearly visible in all legal decisions.
Changes in the carbon leakage list will require recalculations of allocations and preparation of legal
decisions to all affected installations. The database and IT-system, EDO (EnergyDataOnline), used for
the administration of EU ETS by the competent authority are not developed to administrate changes in
sector/installation statuses from CL to non-CL. Consequently, all data in the system will have to be
updated manually by the administrator.
II. Methodological choices
Please bear in mind that the main elements and criteria of the assessment to determine the carbon
leakage list are foreseen in the provisions of the
EU ETS Directive
. There are only certain methodological
aspects left to be decided and they are the subject of this part of the consultation. In order to maximise
the impact of the views expressed, you are therefore strongly encouraged to address the questions below
while keeping in mind the aspects which are already decided on, as explained in the introductory part of
this consultation.
The emission intensity of a sector is part of the criteria for assessing its exposure to carbon leakage risk.
The emission intensity takes into account both direct and indirect emissions. To calculate the indirect
emissions (emissions linked to the electricity consumed by the sector), electricity consumption needs to be
converted into emissions by using an electricity emission factor representing the emission intensity of the
electricity generation. Please share your views on the electricity emission factor to be used (In this case,
electricity emission factors can either refer to average values or marginal values. The average value refers
to the amount of emissions relative to the electricity produced taking into account all the different emission
intensities (linked to fuel used). The marginal value reflects the incremental change in CO2 emissions
linked to the last unit of electricity consumed and differs from the average values due to the heterogeneous
structure of the electricity production (certain power plants producing base load and others peak load.)):
average value – EU average emission intensity derived from electricity generated from the total
fuel mix that includes all sources of energy in Europe
average value – EU average emission intensity derived from electricity generated from fossil fuel
marginal value –  marginal emission factor for the electricity generation determined by the specific
CO2 emissions of the 'last kWh electricity consumed'
If you wish, please motivate your answer:
1000 character(s) maximum
When determining the CO2 emissions linked to the electricity consumption, it is important that values are
used consistently throughout all member states and that they encourage the use of renewable energies.
Consequently, instead of choosing between the three options above, we would suggest a value reflecting
estimated discounted future average emissions intensity 2021-2030 from PRIMES. This is the generating
mix industry quite likely will face from 2021 to 2030.
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In your view, how would you assess international climate policy and action in 2018 compared to 2013, in
particular in light of the Paris Agreement?
Significant progress
X
Some progress
No progress
I don't know
Assessing the exposure of a sector to the risk of carbon leakage includes calculating the trade intensity of
the sector. In this context, it would be useful to have a reflection on whether climate policies in countries
outside the EU can be considered comparable with the EU ETS at this stage since carbon leakage can by
definition only occur when production moves to areas with less strict climate policies than the EU. Do you
consider that countries or regions outside the EU have climate/energy policies that can be considered
comparable with the EU ETS?
Please explain following the guiding sub-questions below.
1. Which countries or regions do you consider to have comparable policies to the EU ETS?
2. Which elements of climate/energy policies worldwide should be considered in determining the
comparability to the EU ETS?
3. Which elements of climate/energy policies worldwide would you find more or less ambitious than the
EU ETS?
4. What do you think is the optimal way to reflect developments in climate policies in countries and
regions outside of the EU in view of the facilitative dialogue and the global stocktake mechanisms
foreseen under the Paris Agreement, as well as other relevant initiatives (e.g Action agenda)?
2000 character(s) maximum
There are promising trends with emissions trading systems in third countries such as China and some
states such as California. However, it is difficult to assess the comparability of these policies, as this
would depend on elements such as coverage of sectors and price signal/costs. Taking these elements
into consideration, there seems to be few countries with comparable policies at current.
Conseqnuently, the regulation should be based on current knowledge of comparable policies and should
be adaptable to reflect future developments in climate policies. The review envisaged in Article 30 of the
ETS-directive will keep under review the measures to support certain energy intensive industries that
may be subject to carbon leakage
In your view, how would you assess the improvement of carbon emission intensities in production in
manufacturing industry, in the EU compared to worldwide, including as regards the evolution of low-carbon
investments and innovation?
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More progress in the EU compared to worldwide
Less progress in the EU compared to worldwide
Same level of progress
X
I don't know
Please explain:
2000 character(s) maximum
We do not have the necessary information on the development of carbon emission intensities in
production in manufacturing industry worldwide in order to make such an assessment.
The EU ETS Directive foresees the possibility for qualitative assessments of sectors in view of
determining their exposure to the risk of carbon leakage. The criteria and the eligibility for these
assessments are laid down in
the Directive
. In order to ensure that such assessments are as robust, fair,
transparent and equitable as the default assessments (where quantitative criteria and thresholds clearly
indicate which sectors should be included in the carbon leakage list), what would you consider a good
approach in terms of process? Please explain:
2000 character(s) maximum
The Danish competent authority of the EU ETS manages quantitative data and has as such no authority
to undertake qualitative assessments of sectors’ risk of carbon leakage.
In order to ensure assessments that are robust, fair, transparent and equitable, the Commission should
undertake the assessments on the basis of objective data. However, it should be taken into consideration
that for all sectors it is beneficial and profitable to be covered by the carbon leakage list, if individual
sectors are to provide qualitative data themselves. Furthermore, we would propose that the
Commission’s assessments are made public before final adoption of the CL-list with the necessary
justification/reasoning in order to promote transparency and debate.
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Which parameters would you consider as most relevant to assess the ability of a sector to pass through
carbon costs into product prices beyond trade intensity? Please explain:
1000 character(s) maximum
It is difficult to assess the ability of a sector to pass through carbon costs into product prices beyond trade
intensity, as this is much dependent on the specific sectors and their market characteristics. However, one
element of consideration could be the relationship between costs of transportation from third countries and
product prices.
The EU ETS Directive foresees the possibility to assess products and sub-sectors rather than sectors in
certain cases. The criteria, eligibility and level of assessment are laid down in
the Directive
. In such cases
of lower levels of disaggregation, there is no official publicly available data. In order to ensure that such
assessments are as robust, fair, transparent and equitable as the default quantitative assessments, what
would you consider as a good approach for assessment of products and sub-sectors? Please explain:
2000 character(s) maximum
As stated in the ETS-directive, any such assessment should be based on duly substantiated, complete,
verified and audited data for the five most recent years. In this context, it should be taken into
consideration that for all sectors it is beneficial and profitable to be covered by the carbon leakage list.
To ensure robust, fair, and transparent assessments, data has to be gathered, assessed and analysed on
an aggregated EU-level on the basis of reliable and official sources, such as national statistics and tax
information. Furthermore, sub-sectors should be able to demonstrate that the data/activities are clearly
linked to the specific subsector/product and separate from the production of other products. However, if
the approach of assessment of products and sub-sectors are to be based on data which are not official
and publicaly available, it is crucial to set up a system of independent control and data verification. This
will result in extensive administration and extra workload for the competent authority and the affected
installations.
In terms of process, we would suggest that the Commission approves the quality of data as well as
performs the quantitative assessment. Member States should be informed of the results of assessments.
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