The EU emissions trading system (EU ETS) was established in 2005 to promote reductions of greenhouse gas emissions in a cost-effective manner. Carbon leakage is the term used to describe the situation that may occur if, for reasons of costs related to climate policies, certain businesses were to transfer production to other countries which have laxer action on greenhouse gas emissions and that would lead to an increase in global emissions.
The ETS Directive provides criteria for how to determine if a sector is to be on the carbon leakage list. A new carbon leakage list has to be determined for the years 2015-2019.
To determine this new list, a public consultation asked the opinion of stakeholders on issues related to the determination of the new carbon leakage list. These issues concern in particular certain assumptions that have to be made when applying the overall approach spelled out in the ETS Directive.
In response to this consultation Carbon Market Watch – Nature Code submitted these comments.