EU polluters to land €5bn windfall under 'carbon leakage' proposal

(guardian-, 15 Sep 2014) European commission report assumes an unrealistically high carbon price, in move expected to cost governments billions.

Heavily-polluting industries are in line for a €5bn (£4bn) handout from Europe’s taxpayers because of the way the EU is measuring their exposure to unregulated competitors outside the bloc, according to an unpublished report prepared for the European commission.

Steel-making, cement and power plants have their greenhouse gas emissions capped by the emissions trading system (ETS) , putting a price on carbon to encourage companies to cut emissions by trading allowances.

The EU calculated the risk of such companies relocating to regions with laxer emissions limits – known as ‘carbon leakage’ – by assuming carbon allowances will be at €30 a tonne up to 2020. But carbon allowances have not touched that price since 2008, when the ETS was set up, and currently languish at around €6 a tonne, due to economic crisis and a market glut.

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guardian-, 15 Sep 2014: EU polluters to land €5bn windfall under 'carbon leakage' proposal