This is a public event. If interested in participating, please email:
fcalvo@ercst.org elesaulnier@ercst.org
The event marks the launch of the third report in our Review of the EU ETS series, which we started in February and are continuing throughout the ongoing legislative process. The report focuses on free allocation conditionality and explores alternatives to the approach set out in the European Commission’s proposal of 17 July, building on the ideas put forward in our second report.
By making free allocation conditional on an investment plan, the European Commission’s proposal of 17 July appears to label it a decarbonisation subsidy rather than a carbon leakage protection tool. The proposed conditionality carries conceptual challenges, impacts competitiveness, and contains uncertainties-notably regarding WTO compatibility, investment plan requirements, and exemptions-while also affecting market functioning. Alternative approaches to investment conditionality can be considered, such as positive conditionality, in which free allocation remains unconditional but additional allowances could be granted to companies successfully delivering decarbonisation milestones after voluntary submission of a plan.