EU ETS indirect compensation

The commission is currently revising the conditions under which member states are allowed to grant state aids to compensate for the cost of indirect CO₂ emissions, for the 4^th period of the EU Emission Trading System (2021-2030).  In the current proposal, petrochemicals would no longer be eligible for financial compensation, whereas the refining sector, though not eligible in the previous period, would be.

Cefic made the most of the opportunity to give feedback on this proposal via a public consultation that ran from 14 January until 10 March. A small taskforce in Cefic worked on a dossier for this public consultation to argue in favour of the eligibility of the petrochemicals industry. Moreover, NERA, an economic consultancy, was asked to review Cefic input and submit an independent dossier to this public consultation.

Petrochemicals Europe Board members provided NERA with data on gross value added and electricity consumption of their petrochemical sites.  These data support the claim by Cefic that numbers used by the European Commission underestimate the risk of carbon leakage.

Indirect costs are understood as the additional costs that companies must pay for the electricity that they consume since electricity producers pass on the carbon price to consumers via electricity prices. Under the EU ETS, industrial installations likely to be exposed to a significant risk of carbon leakage receive special treatment to support their competitiveness.