Free allocation is not driving investment in steel decarbonisation
The EU Emissions Trading System (ETS) is intended to drive decarbonisation investment through the price it places on CO2 emissions: as the cap tightens and the allowance price rises above the cost of abatement, investing in cleaner production becomes more economic than continuing to emit. However, for the past 20 years, steelmakers have received most of their emission allowances for free through free allocation. Here, we show that free allocation has acted as an anesthetic for investment in decarbonisation, rather than a catalyst.
This brief compares the market value of free allowances received with the decarbonisation investment actually committed by the EU27’s three largest steelmakers by output: ArcelorMittal, thyssenkrupp, and voestalpine.
Read the report here.
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