Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?
type: Dataset
description: The EU ETS has been criticised for threatening the competitiveness of European industry and generating carbon leakage, i.e. increasing foreign greenhouse gas emissions. Two main options have been put forward to tackle these concerns : border adjustments and output-based allocation, i.e. allocation of free allowances in proportion to current production. We compare various configurations of these two options, as well as a scenario with full auctioning and no border adjustment. Against this background, we develop a model of the main sectors covered by the EU ETS : electricity, steel, cement and aluminium. We conclude that the most efficient way to tackle leakage is auctioning with border adjustment, which generally induces a negative leakage (a spillover). Another relatively efficient policy is to combine auctioning in the electricity sector and output-based allocation in exposed industries, especially if free allowances are given both for direct and indirect emissions, i.e. those generated by the generation of the electricity consumed. Although output-based allocation is generally less effective than border adjustment to tackle leakage, it is more effective to mitigate production losses in the sectors affected by the ETS.
issued: 2026-05-09T14:30:25.145784
language: en
modified: 2026-05-09T14:30:25.145788
contact point: Organization
  fn: CCSD
keyword: ajustement-aux-frontieres
keyword: allocation-basee-sur-la-production
keyword: border-adjustment
keyword: carbon-leakage
keyword: competitiveness
keyword: competitivite
keyword: emission-trading
keyword: fuites-de-carbone
keyword: infoeu-reposemanticspreprint
keyword: output-based-allocation
keyword: preprints-working-papers-
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
keyword: systeme-de-permis-negociables
landing page: https://hal.science/hal-00866444

Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?
type: Distribution
format: HTML
issued: 2026-05-09T14:30:25.148762
modified: 2026-05-09T14:30:25.133790
access URL: https://hal.science/hal-00866444

test_moissonnage_selune
type: Agent