Countries need to increase action towards low-carbon transition to align with the Paris Agreement, creating new policy options and opportunities. Against this background, this project explored whether inclusion of domestic sales of energy intensive commodities in domestic emission trading schemes is an effective approach to restoring the carbon price signal in these sectors, without damaging competitiveness.

Original Reports

• Report: Inclusion of Consumption of Carbon Intensive Materials in Emissions Trading, An Option for Carbon Pricing Post-2020

Updated Policy Briefs

• Climate Contribution and its role in European industrial decarbonization (2020), WISE Europe
• Green Deal for Industry: A Clear Policy Framework Is More Important Than Funding (2021), DIW

Technical Analysis

• Pricing Carbon Consumption: A Review of an Emerging Trend (2016)
• Legal Design and Practical Administration (2016)
• Quantifying Impact of Inclusion of Consumption (2016)
• Legal Status within EU (2015)
• Follow up analysis: Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation (2020)
• Refined version: Carbon Pricing of Basic Materials: Incentives and Risks for the Value Chain and Consumers (2021)
• Climate Neutral Production, Free Allocation of Allowances under Emissions Trading Systems, and the WTO: How to Secure Compatibility with the ASCM (2021)
• Including Consumption in Emissions Trading. Economic and Legal Considerations (2021)

Preceding sector level analysis

• Steel Report: Carbon Control Post 2020 in Energy Intensive Industries (2014)
• The Cement Report: Carbon Control and Competitiveness Post 2020 (2014)
• The pulp and paper overview paper (2016)

Climate Strategies convened 17 international research partners led by DIW Berlin to analyse whether and how this can be implemented in practice.

• Karsten Neuhoff – DIW Berlin
• Roland Ismer – University Erlangen–Nürnberg
• William Acworth – adelphi
• Andrzej Ancygier – Hertie School of Governance
• Carolyn Fischer – Resources for the Future and FEEM
• Manuel Haussner – University Erlangen–Nürnberg
• Hanna–Liisa Kangas – Finnish Environment Institute
• Yong–Gun Kim – Korean Environment Institute (KEI)
• Clayton Munnings – Resources for the Future
• Anne Owen – Leeds University
• Stephan Pauliuk – University Freiburg
• Oliver Sartor – Institute for Sustainable Development and International Relations
• Misato Sato – The Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Sciences
• Jan Stede – DIW Berlin
• Thomas Sterner – University of Gothenburg
• Michael Tervooren – PricewaterhouseCoopers Germany
• Ruud Tusveld – PricewaterhouseCoopers Netherlands
• Richard Wood – Norwegian University of science and Technology
• NTNUZhang Xiliang – Tsinghua University
• Lars Zetterberg – Swedish Environmental Research Institute (IVL)
• Vera Zipperer – DIW Berlin

Legal and administrative assessments show that inclusion of consumption of carbon intensive materials can be aligned with existing procedures of public and private actors. The consumption-based approach also avoids WTO and political challenges with trade-related measures.

The project carried out a number of highly informative stakeholder consultations and workshops. Please see an overview of events organised below. All publications for this project are available on this page.

Media coverage for this project included an op-ed by Karsten Neuhoff on Energy Post and coverage on Carbon Pulse. The project was finalised with an event in the European Parliament, Brussels, on Tuesday May 24, 2016 hosted by Jens Geier MEP (S&D).

This project was a precursor to Climate Strategies and DIW Berlin’s collaborative project investigating options to reduce emissions from the basic materials sector.

Events organised include: