Given that there is as yet no hard evidence of carbon leakage caused by indirect costs passed through by power companies, Carbon Market Watch cannot support using taxpayer money to protect the industry from an unproven “carbon leakage risk”.

Indirect cost compensation, coupled with free allocation of emission allowances, undermines the polluter pays principle and removes market incentives for energy-intensive industries to take steps towards energy efficiency, decarbonisation and investments in cleaner production. The state aid schemes implementing these guidelines, in essence, lead to subsidies for more pollution, under the guise of tackling a problem that does not exist.

Full submission here