In the opinion of Carbon Market Watch, the carbon border adjustment mechanism on which the European Commission is working is not necessary, since heavy industry has already been benefiting from free allowances under the ETS since 2005, which have led to windfall profits without any evidence of a proven risk of carbon leakage (company relocations).
The NGO stressed this on Wednesday 1 April in a position paper on the proposed instrument to protect European industry from unfair competition from non-Member States that are less virtuous than the EU with regard to the climate.
“There is no evidence of carbon leakage having taken place due to climate policies such as the ETS, and ex-ante theoretical predictions have found a very limited risk in the future, materialising (theoretically) only at very high carbon prices. Therefore, the free allocation should be fully phased out. Moreover, while the power sector, which must purchase its allowances, has decarbonised steadily year after year, industrial emissions have stagnated since 2012”, says the NGO.
Considered as an alternative to existing measures under the ETS, a border adjustment mechanism would allow the free allocation to be phased out - a step forward, inCarbon Market Watch’s view. However, the NGO considers that “neither the free allocation of pollution permits nor such a mechanism are necessary tools for climate action”. (Original version in French by Aminata Niang)