• In the EU ETS, free allowance allocation is used to safeguard the competitiveness of the regulated industries and to avoid carbon leakage. In Phase I and II, most allowances were given for free. With Phase III, auctioning became the default method for allocation of allowances. However, industrial sectors receive free allowances according to emission efficiency benchmarks and depending on the sectoral risk of carbon leakage. Sectors at risk of carbon leakage are identified based on carbon and trade intensity. • We analysed the empirical research on the EU ETS relevant to free allocation. First, no strong evidence has been found that the EU ETS affected the competitiveness of the regulated industries. Second, an overly conservative criterion for identifying the sectors at risk of carbon leakage meant that free allowances were given to installations which most likely were in fact not at risk. Third, evidence of pass-through of carbon costs was found not only for the electricity sector, but also for industrial sectors. • The reform for Phase IV proposed by the European Commission introduces some changes relevant to free allocation. Notably, it devises a more efficient criterion for identifying the sectors at risk of carbon leakage and it sets a rule for updating the benchmark values.
Customers are expected to play a fundamental role in the transition to a decarbonised and digitalised energy system. However, experience so far suggests that customer engagement in energy markets cannot [...]
This deliverable, which is part of the Horizon 2020 OneNet project, outlines the alignment activities carried out in OneNet Task 3.4, focusing on integrating the proposed electricity market concepts with [...]
Flexibility involves the adjustment of energy consumption or generation schedules to benefit the grid, for instance, providing services such as balancing, congestion management, and voltage control. Flexibility can be offered [...]