Compass Lexecon advises the European Commission on its revision of the State Aid Guidelines for the EU ETS scheme post-2021

On 21 September 2020, the European Commission ("EC") adopted the revised European Emission Trading Scheme (ETS) State Aid Guidelines aimed at reducing the risk of carbon leakage related to indirect ETS costs (through electricity prices) for the next phase of the EU ETS (2021-2030). These Guidelines define the sectors eligible for compensation and the methodology for defining the compensation that can be granted by member states to the different sectors.

A team of Compass Lexecon experts assisted DG COMP in the retrospective evaluation of the State Aid Guidelines for the compensation of these eligible industrial sectors, and the prospective impact assessment of the future Guidelines post 2021:

• We provided the EC with an economic analysis of the different factors affecting the risk of carbon leakage for 41 electro-intensive industries whose competitiveness might be negatively impacted by the ETS indirect carbon costs.
• Our economists also assisted the EC in evaluating the methodology for the calculation of the compensation that can awarded to the eligible sectors. This analysis covered the different relevant parameters considered for the compensation of indirect carbon costs such as the emission factor, the aid intensity, and the gradual decrease of the aid.

The Compass Lexecon team included Fabien Roques, Hélène Laroche-Bonfils, Catherine Doulache, David de Magalhaes and Anastasia Tseomashko.

EMISSIONS TRADING & CARBON POLICIES ANALYSIS
VIEW THE REPORT ON THE EUROPEAN COMMISSION WEBSITE