Indirect Emissions in the EU CBAM

Author(s): Andrei Marcu,  Michael Mehling, Aaron Cosbey, Alexandra Maratou, Anita Vollmer

This new report examines one of the most critical issues in the current political debate on the EU’s Carbon Border Adjustment Mechanism (CBAM): the treatment of indirect emissions. The Commission proposal envisions a potential inclusion of indirect emissions in the scope of the CBAM at a later stage while the Parliament supports an immediate inclusion. With the Council aligning itself with the Commission on this point, the topic will have to be decided in the trilogue negotiations.

Including indirect emissions could have great environmental benefits, as there are significant emissions from combustion processes used to generate electricity, heat, and steam. However, this would not align with the scope of the EU ETS which does not explicitly factor indirect emissions into an installation’s carbon footprint. Additionally, there are concerns of a negative impact on electro-intensive industries in the EU which would face higher costs than their competitors due to the EU’s marginal electricity pricing system. These are only a few of the arguments surrounding this highly complex topic.

In this report, ERCST presents a comprehensive analysis of the different arguments as well as recommendations on how to address indirect emissions in the EU CBAM.

Watch the recording of the launch event here: https://www.youtube.com/watch?v=GffB7_lBeaM

Full materials from the launch event, including slides, can be found here.