Additional profits of sectors and firms from the EU ETS. 2008-2019

This study has calculated the additional profits that sectors and companies have made in the EU ETS between 2008 to 2019 for the 15 most CO2-intensive sectors plus aviation in 19 EU countries. The study investigates three types of profits:

  1. Profits from overallocation of free emission allowances. Industry received free emission allowances in excess of demand resulting in additional profits worth an estimated € 1.6 billion between 2008-2019.
  2. Profits from using cheaper international offsets for compliance which companies were entitled to use for compliance. This has created additional profits worth € 3 billion between 2008 and 2019.
  3. Profits from passing through (part of) the opportunity costs of freely obtained allowances into product prices. The design of the EU ETS, with a hybrid mix between free allocation and auctioning for emissions above the benchmarks, make it likely that producers are capable of passing through the costs. This has generated additional profits worth € 26 to € 46 billion between 2008 and 2019.

In total, the additional profits for the fifteen sectors in the nineteen countries ranged between € 30 to over € 50 billion in the period 2008-2019. In absolute terms, additional profits were the highest in the iron and steel sector (€ 11.9 to € 16.1 billion) followed by the cement (€ 7.1 to € 10.3 billion) and refineries (€ 5.9-11.3 billion).

The study recommends policy makers to consider alternative means of protection to carbon leakage to ensure European industries decarbonise while remaining competitive on a global playing field.