Decision 2019/708 - Commission Delegated Decision 2019/708 supplementing Directive 2003/87/EC concerning the determination of sectors and subsectors deemed at risk of carbon leakage for the period 2021 to 2030 - Main contents

EN

Official Journal of the European Union

L 120/20

Directive 2003/87/EC provides that auctioning of greenhouse gas emission allowances is the basic principle within the scope of the system for greenhouse gas emission allowance trading within the Union (EU ETS).

The European Council of October 2014 considered that free allocation should not expire and that existing measures should continue after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies. To preserve the environmental benefit of emission reductions in the Union while measures by third countries do not provide industry with comparable incentives to reduce emissions, transitional free allocation should continue to installations in sectors and subsectors at risk of carbon leakage.

Experience gathered during the operation of the EU ETS has confirmed that sectors and subsectors are at risk of carbon leakage to varying degrees, and that free allocation has prevented carbon leakage. While some sectors and subsectors can be deemed to be at a higher risk of carbon leakage, others are able to pass on a considerable share of the costs of allowances to cover their emissions in product prices without losing market share, and only bear the remaining part of the costs so that they are at a low risk of carbon leakage. To address the risk of carbon leakage, paragraph 5 of Article 10b of Directive 2003/87/EC provides that the Commission is to determine a list of sectors and subsectors deemed to be at risk of carbon leakage list. Those sectors and subsectors are to receive free allowances at 100 % of the quantity determined pursuant to Article 10a of Directive 2003/87/EC.

By its Decision 2014/746/EU (2), the Commission determined a carbon leakage list for the period 2015 to 2019. By Directive (EU) 2018/410 of the European Parliament and of the Council (3), the validity of the carbon leakage list was extended until 31 December 2020.

Article 10b of Directive 2003/87/EC sets out the criteria for the assessment based on data from the three most recent calendar years available. In this regard, the Commission used data from the years 2013, 2014 and 2015 since, at the time of the assessment, data from 2016 were only available for some of the parameters.

In order to establish the carbon leakage list for 2021-2030, the Commission assessed the risk of carbon leakage of sectors and subsectors at NACE-4 level of the statistical classification of economic activities in the Union in accordance with Regulation (EC) No 1893/2006 of the European Parliament and of the Council (4). NACE-4 is the level with optimal data availability defining sectors precisely. A sector is denoted at a 4-digit level of the NACE classification, and a subsector is denoted at Prodcom-6 or 8-digit level, that is, the classification of goods used for statistics on industrial production in the Union, following directly from the NACE classification.

The carbon leakage assessment was carried out in two steps. For the quantitative first-level...