Importance of free allowances and therefore also a correct CL list
As also mentioned in the Council conclusions, in order to maintain international competitiveness, the most efficient installations in carbon leakage sectors need to be safeguarded against unilateral climate policy costs. In the EU ETS, this is organized with free allowances. Only when sectors are part of the CL list, they are eligible for receiving this safeguard. It is therefore imperative that utmost is done to make a correct Carbon Leakage list where the principle of equality of treatment should also be reflected.
Trade intensity determination: The trade intensity shall be calculated on the basis of the trade flows between countries under the EU ETS (i.e. European Economic Area) and third countries. The trade intensity should take into account trade with all countries which do not have an equal ETS system. The scope and burden of such equal ETS should be similar as the EU ETS system or protection mechanisms that are in place. Indeed, only systems with a similar burden for companies can be considered as equal to the EU ETS system. Some systems only cover power industry or only few industrial subsectors and/or not applicably in the whole region. In that case there is no equal burden and therefore still a carbon leakage risk.
The electricity market price is set by the marginal power plant. Thus to be consistent, the CO2 emission factor of the marginal power plant shall be the one to be used for the assessment of indirect CO2 emissions linked to electricity consumption.
All depends on the correctness and completeness of data; Sector federations can help.
For a correct Carbon Leakage list, complete and correct data is essential. Sector federations need to be part of the data gathering, to ensure timely correct and complete data. Incorrect or incomplete data can result in erroneously removal of a sector from the Carbon Leakage list.
Sub-sectoral activitiesmust also be considered for inclusion in the Carbon Leakage list
Maintaining the possibility to be assessed at disaggregated level is crucial to preserve the fairness and completeness of the Carbon Leakage list.
In addition to this, the timing, verification, and coherence of data sets and related administrative and procedural rules are essential to preserve the equity of the carbon leakage list. In particular, the timing and administrative requirements applicable to the disaggregated assessment should be aligned with those applicable at NACE level.
Carbon leakage protection criteria should also include the assessment of the value chain effects because subsectors might be impacted by exposure of up- or downstream sectors and this should be taken into account. The precautionary principle should be applied.