German cabinet agrees carbon leakage threshold

Berlin to argue that sectors producing more than four kilograms of CO2 per unit of output should get carbon leakage protection

Germany's cabinet has agreed on a formula it says should be used to decide which industries get free emission allowances to prevent carbon leakage in the third phase of the EU's carbon trading scheme, the FT Deutschland newspaper reports.

Sectors generating more than four kilograms of CO2 to achieve one euro of gross output should get free allowances, according to the report.  Germany has argued in talks to revise the EU scheme that there should be a single criterion to determine free allocation (EED 31/10/08) and that this should be included in the revised carbon trading directive (EED 20/10/08).  But it has not yet proposed a threshold figure.  The European commission is expected to publish proposals soon.

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