Carbon Market Watch calls for an explicit end to linking EU ETS revenues and indirect cost compensation. The potential expansion of indirect cost compensation to further sectors risks to seriously undermine the decarbonisation efforts of industries such as chemicals.

While the next EU ETS revision must include an end date for the indirect cost compensation scheme, numerous other avenues remain to significantly improve the CO2 cost compensation State aid guidelines:

– update regional emission factors so they don’t only include fossil fuels – introduce a sunset clause and decreasing aid intensity

– quantify the risk of carbon leakage for the sectors added

– update annually and automatically regional CO2 emissions factors and electricity consumption efficiency benchmarks

– improve transparency on Member States distribution of ICC

– rule out all support to fossil fuels in Article 10(c)