“Cement industry top management now has little confidence in the EU ETS; structural reform is needed to help investment in energy efficiency and innovation, and reduce energy costs and carbon emissions in Europe” said Karsten Neuhoff, from the German Institutefor Economic Research (DIW Berlin), launching a key new economic report today.

Neuhoff is lead author of the report, on the European cement industry by the international research network Climate Strategies. The study looks at the experience of the European cement sector with the EU ETS and other energy and climate policy instruments.

The EU ETS was a key focus of attention from top management in its early years, but its relevance has slumped drastically. Carbon intensity of cement production has improved by 3-5% in total, but mainly as a result of incentives outside the EU ETS.

Industry responds to changes of policy and regulation, but so far free allocations and a low carbon price have meant the ETS has not provided sufficient economic incentive to stimulate further emission