ABOUT US OUR EXPERTS NEWS SERVICES PUBLICATIONS CAREERS CONTACT HOME PUBLICATIONS Fertilizers Europe CARBON LEAKAGE IN THE NITROGEN FERTILIZER INDUSTRY Going forward, the ETS will – and should – be strengthened as the main climate policy instrument in the EU. At the same time, dealing effectively with carbon leakage becomes tantamount in order to achieve an effective ETS that truly reduces global greenhouse gas emissions, and not just relocates emissions and production to countries with less ambitious climate policies. While there have been many positive signals in analyses done by the Commission, the proposed revision of the ETS risks not providing adequate compensation for the industries at the highest risk of carbon leakage, such as the fertilizer industry. The main conclusions of our study are The nitrogen fertilizer industry is at substantial risk of carbon leakage even at low ETS prices Going forward, scarce free allowances for leakage compensation should be allocated to the industries at the highest risk of leakage instead of spreading the layer to thinly through e.g. cross-sectoral correction factors or tight benchmarks. Using ‘cost pass through’ potentials of an industry for assessing the risk of carbon leakage should be treated with much caution. The study is commissioned by Fertilizers Europe “ I am impressed by Copenhagen Economics’ professional competence and ability to identify the key issues for our industry. They provided us outstanding insight into the underlying economic mechanisms and delivered an excellent presentation of the main results of the study at the European Parliament. DR. ANTOINE HOXHA - TECHNICAL DIRECTOR, FERTILIZERS EUROPE DOWNLOAD AUTHOR(S) Helge Sigurd Næss-Schmidt RELATED WORK Fertilizers Europe Critical review of recent report on cost pass-through and carbon leakage Malaysian Palm Oil Council Use of ILUC in EU regulation: fundamental challenges in science remain unresolved The Danish Council on Climate Change (Klimarådet) Danish agriculture's emission of greenhouse gases and production Nordic Council of Ministers Carbon leakage in the Nordic countries Fortum OYJ Decarbonisation of the Nordics COPENHAGEN Langebrogade 1 DK-1411 Copenhagen VAT number: DK25262441 CONTACT STOCKHOLM Lilla Nygatan 14 SE-111 28 Stockholm VAT number: SE516405041001 CONTACT HELSINKI Hämeentie 11 FIN-00530 Helsinki VAT number: FI29062416 CONTACT BRUSSELS Maison de la Radio Place Eugène Flagey 18 BE-1050 Brussels VAT number: BE0674684785 CONTACT Privacy Notice ALL RIGHTS RESERVED @ 2021 COPENHAGEN ECONOMICS FOLLOW US ON Hard facts. Clear stories COOKIES We use cookies to give you the best possible experience with our website. By using our site you agree with our cookie policy OK