The EU Emissions Trading Scheme (EU ETS) was set up twenty years ago as the cornerstone of EU climate policy. It puts a price on carbon with the objective of internalising the cost of greenhouse gas (GHG) emissions for companies operating in the EU.
In practice, the EU ETS has had a financial impact for the EU glass sector, as for other manufacturing industries, for the last ten years. This impact has been gradually increasing along with the carbon allowance price at EU level, as well as with the reduction with the free allocation of a share of these allowances, which aims at partially cushioning the loss of global competitiveness.
The Carbon Border Adjustment Mechanism (CBAM) currently under adoption at EU level is expected to enter into force on 1 October 2023. It is designed to gradually replace free allocation by an equal price imposed upon importers into the EU market. While the glass industry will not be among the first sectors covered by the CBAM, the policy schedule foresees its inclusion by 2030 as one of the industries at risk of carbon leakage, i.e. of global competitiveness loss due to the carbon cost.
The paper will discuss the impact that the EU ETS is expected to have on the EU glass sector after the latest revision of the scheme, which simultaneously increases the emission reduction ambition and decreases free allocation. It will also present the CBAM design and its potential results for the glass industry after its expected inclusion.
