The EU Emissions Trading System (ETS) provides a mechanism allowing member states to grant financial compensation to companies to offset indirect CO2 costs passed through via an increase in power prices.
The provision aims at helping industries facing global competition to remain competitive. With this respect, on 22 May 2012, the Commission adopted Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post 2012.
Steel is among the eligible sectors. However, Eurofer believes the level of aid foreseen by the Guidelines falls well short of actual costs. It is capped to 80% of the relevant electricity consumption benchmark and would in most cases cover only 60% of the needs. Therefore, compensation would not fully address the risk of carbon leakage moving production to offshore locations