Subject: State aid relating to emissions trading
Delegated Decision (EU) 2019/708 sets out the sectors and sub-sectors deemed to be at risk of carbon leakage for the period 2021-2030. The annex to that decision contains a long list of 63 sectors and sub-sectors. By contrast, in the guidelines on state aid in the context of the Emissions Trading Scheme, only 17 sectors are listed as being eligible for aid to compensate for indirect emission costs passed on in electricity prices.
Immediately prior to the pandemic, in February 2020, the price of emission allowances was around EUR 20. In December 2021 that price was already in excess of EUR 80. This has had a serious impact on industry, albeit indirectly through electricity prices.
1. Why has the Commission not included indirect costs in its proposal for a carbon border adjustment mechanism?
2. Does the Commission plan to amend the guidelines on state aid in the context of emissions trading so as to broaden the range of sectors to which they relate?
Answer given by Mr Gentiloni on behalf of the European Commission
(25 March 2022)
1. In proposing the Carbon Border Adjustment Mechanism (CBAM), the Commission endeavored to ensure a careful, predictable and proportionate transition for businesses and authorities. During the transitional period, importers will be asked to report both direct and indirect emissions for monitoring purposes. The Commission will review that data and assess, by the end of the transition period, i.e. end of 2025, or later based on further assessment, among others, the possibility to include indirect emissions in CBAM. Their inclusion would in any case be conditional on the development of a solid methodology.
2. The EU Emissions Trading System (EU ETS) State aid Guidelines (1) on indirect cost compensation were revised in September 2020. The Commission has consulted Member States on possible targeted amendments to the ETS State aid guidelines, in particular to expand the list of eligible sectors, while ensuring that they are subject to reinforced incentives to improve energy efficiency and/or decarbonise their production and limiting competition distortions among Member States. It will decide on the best approach after having received feedback from the Member States also on the consultation launched on 10 March on the need for and scope of a possible Temporary Crisis Framework.
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