Analysis of competitiveness and carbon leakage risk of European industries

The assessment of the competitiveness effects of the EU Emissions Trading System (EU ETS) and the carbon leakge risk of European industries plays a central role in the further development of the EU ETS, e. g. for rules regarding the free allocation of emission allowances or the various design elements of the market stability reserve (MSR). In this context, this project examines how carbon leakage risk can be redefined and operationalised in a world with an increasing international ambition in climate policies. An econometric analysis is used to investigate whether the EU ETS has so far led to carbon leakage in European industries and whether the carbon leakage risk has changed following the adoption of the amended EU ETS Directive in 2017. Finally, the project estimates how planned climate policies worldwide will affect the competitiveness and carbon leakage risk of European industries in the future and discusses how findings relate to the current carbon leakage indicators and measures of the EU ETS.