Benchmarks set under the European Union's Emissions Trading System (ETS) to calculate the free allocation of allowances for each installation covered by the ETS often support high-carbon incumbent installations at the expense of lower-carbon alternatives, says a report by think tank Sandbag, published on Tuesday 5 January.
A benchmark is a reference value for greenhouse gas (GHG) emissions that are related to a production activity. There are currently 54 such benchmarks and they are calculated using the average greenhouse gas emissions of the 10% most efficient installations producing a specific product (e.g. steel) in the EU.
They are used to determine the level of free allowances that will be received by each installation in each sector.
However, according to Sandbag, these benchmarks often treat differently, or even exclude, low-carbon alternative technologies and products, leading to the granting of more free allowances to installations with high GHG emissions. As a result, “there is less incentive for industries to use more carbon-efficient production methods, defeating one of the main aims of the EU ETS”, the organisation noted.
See the report: https://bit.ly/35g7Azb (Original version in French by Damien Genicot)