Inclusion of Consumption in Emissions Trading
Completed Project
Project Management
Karsten NeuhoffProject Period
January 1, 2015 - June 30, 2016Commissioned by
Climate StrategiesContext
While the UNFCCC Lima outcome and the UNSG’s Climate Summit, among other developments, reconfirmed that pricing carbon remains a key emissions reduction tool, the focus of international negotiations has shifted from global carbon pricing mechanisms towards support for countries in their implementation of national transformation strategies, often including forms of pricing. But if countries retain flexibility in their policy mix, national carbon prices might continue to differ over longer time horizons and countries are likely to continue to implement free allowance allocation in emission trading schemes as a mechanism for leakage protection – which inevitably blunts the intended carbon price signal .
Objective
Against this background we would like to explore:
whether inclusion of domestic sales of selected energy intensive commodities (e.g. steel, cement) in domestic emission trading schemes to complement upstream coverage of installations is an effective and feasible approach towards restoring the carbon price signalalong the value chain in these sectors without damaging competitiveness.
This would build on the experience of both Korea and some Chinese pilot schemes that use a similar mechanism to re-instate a carbon price signal for electricity consumption that is muted due to electricity regulation. In these schemes, large electricity consumers have to surrender allowances proportional to electricity consumption and a benchmark rate of carbon intensity of power.
DIW Team
Head of Department
Head of Department
Head of Department
Former members
Documents keyboard_arrow_up
Original reports
Inclusion of Consumption of Carbon Intensive Material in Emissions Trading (PDF, 0.77 MB)
Climate Strategies Report, May 2016
Ergänzung des Emissionshandels: Anreize für einen klimafreundlicheren Verbrauch emissionsintensiver Grundstoffe (PDF, 191.79 KB)
DIW Wochenbericht 27/2016
Updated policy briefs
Climate Contribution and its role in European industrial decarbonization (2020), WISE Europe
Green Deal for Industry: A Clear Policy Framework Is More Important Than Funding, DIW Weekly Report 10 / 2021
Green Deal für die Industrie: Wichtiger als Förderung sind klare Rahmenbedingungen, DIW Wochenbericht 10 / 2021, S. 153-162
Technical analysis
Pricing Carbon Consumption: A Review of an Emerging Trend (PDF, 430.64 KB)
DIW Discussion Papers 1620/2016
Policy Summary (PDF, 0.56 MB)
Inclusion of Consumption of Carbon Intensive Material in Emissions Trading
Climate Strategies Policy Summary, May 2016
Inclusion of Consumption into Emissions Trading Systems: Legal Design and Practical Administration
DIW Discussion Papers 1579/2016
Quantifying Impact of Inclusion of Consumption Based Charge for Carbon Intensive Materials on Products (PDF, 2 MB)
DIW Discussion Papers 1570/2016
Refined version: Carbon Pricing of Basic Materials: Incentives and Risks for the Value Chain and Consumers (2021) DIW Discussionpaper 1935 / 2021
Inclusion of Consumption into the EU ETS: The Legal Basis under European Union Law
RECIEL Journal Vol. 24 (3), 2015
Follow up analysis: Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation (2020), DIW Discussion Paper 1855
Preceeding sector level analysis
Steel Report: Carbon Control Post 2020 in Energy Intensive Industries (2014), Climate Strategies Report
The Cement Report: Carbon Control and Competitiveness Post 2020 (2014), Climate Strategies Report
The pulp and paper overview paper
Team keyboard_arrow_up
This project is led jointly by Climate Strategies and DIW Berlin and delivered by a multidisciplinary, international team of researchers from a number of institutions, representing various fields (EU law and institutions, climate policy and economics, energy market and infrastructure policy and economics).
Advisory Group
Maurits Henkemans – Chair
Chang Hoon Lee, Korean Environment Institute
Carl de Mare, Karl Buttiens, Arcelor Mittal
Rob van der Meer, Heidelberg Cement
Sam Van Den Plas, WWF
Wang Yi, Institute of Policy and Management, Chinese Academy of Science
Researchers contributing to papers of the Inclusion of Consumption projects
William Acworth, DIW Berlin, Germany
Andrzej Ancygier, Hertie School of Governance, Germany
John Barrett, University of Leeds, UK
Carolyn Fischer, Resources for the Future
Manuel Haußner, University of Erlangen, Nürnberg
Roland Ismer, University of Erlangen, Nürnberg
Hanna-Liisa Kangas, Finnish Environment Institute
Yong-Gun Kim, Korea Environment Institute
Clayton Munnings, Resources for the Future
Anne Owen, University of Leeds, UK
Stefan Pauliuk, Freiburg University, Germany
Jean-Pierre Ponssard, CNRS, France
Philippe Quirion, CIRED, France
Susanna Roth, Swedish Environmental Research Institute (IVL)
Nagore Sabio, UCL Energy Institute, UK
Oliver Sartor, Institute für Sustainable Development and International Relations (IDDRI)
Misato Sato, London School of Economics, UK
Anne Schopp, DIW Berlin, Germany
Thomas Sterner, University of Gothenburg, Sweden
Richard Wood, Norwegian University of Science and Technology (NTNU)
Zhang Xiliang, Tsinghua University, China
Lars Zetterberg, Swedish Environmental Research Institute (IVL)
Events keyboard_arrow_up
Over the course of the first year of the project, several workshops were held side-to-side to steering committee meetings. The following provides a list of the meetings, including links to agendas and presenations, starting with the most recent event.
| 24.05.2016 Brussels |
Launch of IoC Report in the European Parliament | Agenda (PDF, 409.29 KB) Report (PDF, 0.77 MB) |
| 22.01.2016 Berlin |
Implementation details matter: Roundtable Discussion on Inclusion of Consumption | Agenda (PDF, 177.51 KB) |
|
20.11.2015 |
Innovation in the Materials Sector | Agenda (PDF, 187.66 KB) |
| 1./2.10.2015 Seoul, Korea |
Experience with Emission Benchmarks - Options for International Coordination |
Agenda (PDF, 182.88 KB) Lim, D-W. Experience with Emission Benchmarks. ETS ALLOCATION in KOREA (PDF, 0.52 MB) Matthes, F. EU and Germany's experience with ETS benchmarking (PDF, 335.12 KB) Matthes, F. The importance of carbon intensive sectors and their specific mitigation options (PDF, 258.17 KB) Morgenstern, R. U.S. Experience with ETS Benchmarking: The case of California (A.B. 32) (PDF, 0.83 MB) Neelis, M. Benchmarking in the EU ETS (PDF, 0.88 MB) Neuhoff, K. Experience with Emission Benchmarks. Options for International Coordination (PDF, 259.39 KB) Neuhoff, K. Leakage Protection options (PDF, 369.13 KB) Qing, T. Beijing Pilot ETS: Allowance Allocations, Benchmarks & Incorporation of Consumption (PDF, 0.73 MB) Ritchie, A.Benchmark development: UK and EU experience (PDF, 1.17 MB) |
| 7./8.07.2015 Beijing, China |
Inclusion of Consumption for Carbon Pricing |
Neuhoff, K. Inclusion of Consumption - Beijing Project Workshop (PDF, 1.5 MB) |
|
8.06.2015 |
Inclusion of Consumption for Carbon Pricing - Relevance and feasibility for the pulp and paper sector |
Agenda (PDF, 354.53 KB) Acworth, W. Inclusion of Consumption in Emissions Trading – an International Comparison (PDF, 0.69 MB) Ismer, R. Including Consumption – Administrative Aspects (PDF, 353.78 KB) |
| 26.01.2015 Berlin |
Inclusion of Consumption in Emissions Trading - Kick-off Workshop |
Agenda (PDF, 141.19 KB) Neuhoff, K. Inclusion of Consumption in ET (PDF, 0.63 MB) |