Impact of EU ETS phase IV proposals on administrative costs

And on quality of the data collection process

Published: 14/03/2016

In order to prevent industrial production to move to regions outside the EU with less stringent climate change policies (carbon leakage), in the EU Emissions Trading Scheme (EU ETS), free allowances are granted to companies in industrial sectors that are subject to this risk. For the next phase of the EU ETS (Phase IV, from 2021 until 2030), the European Commission and other stakeholders are discussing an improved free allocation of emission allowances.

This report assesses the administrative costs of two main design elements in the Phase IV proposals for free allocation. The first aspect regards following the changes in an installation’s production more closely in the allocation, leading to more regular adjustments of free allowances. The second aspect regards the classification of sectors into Carbon Leakage ‘tiers’. In addition, this report provides an assessment of the timeline proposed towards Phase IV and the data collection processes involved.