The Emission Trading Scheme of the European Union (EU ETS) is the main policy tool to reduce greenhouse gas emissions in the manufacturing industry. This report assesses whether the EU ETS had an impact on reducing the CO2 emissions in the cement sector. In addition, the report analyzes, whether the EU ETS has generated carbon leakage in the cement and steel sectors.
The results of the assessment show that the abatement from the EU ETS in the cement sector has been very limited and accounts (maybe) to 2%. Further conclusions that can be derived from the results of the report are that
- the EU ETS has not reduced the energy intensity of clinker production;
- there is no clear impact on the carbon intensity of the fuel mix;
- the EU ETS seems to have reduced the clinker ratio by approximately 2 percentage points, compared to the historical trend.
Another conclusion of the report is that the EU ETS has not generated carbon leakage, at least in the short run (‘operational leakage’) in the cement and steel sectors. The analysis on this point is based on various econometric methods whose results converge, which provides confidence on the results robustness.
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Table of contents:
1 |
Executive summary |
5 |
2 |
Introduction |
5 |
3 |
Did the EU ETS reduce CO2 emissions in the cement sector? |
6 |
3.1 |
Introduction |
6 |
3.2 |
Cement production process and potential for abatement |
7 |
3.3 |
Data sources |
9 |
3.4 |
Evidence |
11 |
4 |
Carbon leakage and competitiveness of cement and steel industries under the EU ETS |
14 |
4.1 |
Introduction |
14 |
4.2 |
Literature review |
15 |
4.3 |
Industry contexts |
17 |
4.3.1 |
Cement |
17 |
4.3.2 |
Steel |
18 |
4.4 |
Methodology and data |
18 |
4.4.1 |
A simple analytical model |
18 |
4.4.2 |
Estimated equation |
20 |
4.5 |
Econometric techniques |
21 |
4.6 |
Data |
22 |
4.7 |
Results |
23 |
4.7.1 |
Descriptive statistics |
23 |
4.7.2 |
Regression results |
27 |
5 |
Conclusion |
30 |
|
References |
33 |