Commission Decision of 27 October 2014 determining, pursuant to Directive 2003/87/EC of the European Parliament and of the Council, a list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage, for the period 2015 to 2019 (notified under document C(2014) 7809)Text with EEA relevance

Commission Decision of 27 October 2014 determining, pursuant to Directive 2003/87/EC of the European Parliament and of the Council, a list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage, for the period 2015 to 2019 (notified under document C(2014) 7809) (Text with EEA relevance) (2014/746/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC OJ L 275, 25.10.2013, p. 32. , and in particular Article 10a(13) thereof, Whereas: (1) Directive 2003/87/EC provides that auctioning should be the basic principle for allocation of greenhouse gas emission allowances to operators of installations within the scope of the Emission Trading System of the Union (EU ETS) from 2013 onwards. However, eligible operators continue to receive free allowances between 2013 and 2020 in accordance with the rules set out in Directive 2003/87/EC and Commission Decision 2011/278/EU Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ L 130, 17.5.2011, p. 1). . (2) The absence of an ambitious international agreement on climate change aiming to limit the global temperature increase to 2 °C could undermine the benefit of actions carried out by the Union. The absence of binding action at the international level could lead to an increase in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints (carbon leakage). To address this risk of carbon leakage, Directive 2003/87/EC provides that, subject to the outcome of the international negotiations, the Commission is to determine a list of sectors and subsectors deemed to be exposed to a significant risk of carbon leakage (list of sectors and subsectors). Those sectors and subsectors should receive free allowances at 100 % of the quantity determined on the basis of Directive 2003/87/EC and Decision 2011/278/EU, subject to the cross-sectoral correction factor referred to in Article 10a(5) of Directive 2003/87/EC and set out in Annex II to Commission Decision 2013/448/EU Commission Decision 2013/448/EU of 5 September 2013 concerning national implementation measures for the transitional free allocation of greenhouse gas emission allowances in accordance with Article 11(3) of Directive 2003/87/EC of the European Parliament and of the Council (OJ L 240, 7.9.2013, p. 27). . (3) In this respect, the Commission analysed the extent to which third countries representing a decisive share of global production of products in sectors and subsectors on the carbon leakage list firmly commit to reducing greenhouse gas emissions in those relevant sectors, and whether those commitments are comparable with those of the Union and are carried out within the same time-frame. In addition, the extent to which the efficiency of the installations located in those countries is comparable to the installations located in the Union was also examined. The Commission concluded that no sufficient comparability can be established on the commitment to reduce greenhouse gas emissions, and therefore the comparability of carbon efficiency is not relevant.

(4) The first list of sectors and subsectors deemed to be exposed to a significant risk of carbon leakage was established for 2013 and 2014 by Commission Decision 2010/2/EU Commission Decision 2010/2/EU of 24 December 2009 determining, pursuant to Directive 2003/87/EC of the European Parliament and of the Council, a list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage (OJ L 1, 5.1.2010, p. 10). in 2009. (5) The assessment should be based on a number of quantitative and qualitative criteria, and based on data from the three most recent years. In this regard, the Commission used data from the years 2009, 2010 and 2011, since data from 2012 were available for only some of the parameters. (6) In order to establish the list of sectors and subsectors, the Commission assessed the risk of carbon leakage of sectors and subsectors at NACE-4 level of the Statistical classification of economic activities in the Union in accordance with Regulation (EC) No 1893/2006 of the European Parliament and of the Council Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1). . NACE-4 is the level with optimal data availability defining sectors precisely. A sector is denoted at a 4-digit level of the NACE classification, and a subsector is denoted at CPA (6-digit) or Prodcom (8-digit) level, that is, the classification of goods used for statistics on industrial production in the Union, following directly from the NACE classification. (7) The sectors were first assessed on the basis of the quantitative criteria set out in Article 10a(15) and (16) of Directive 2003/87/EC. To apply those quantitative criteria, the Commission had to determine the sum of direct and indirect additional costs induced by the implementation of Directive 2003/87/EC. (8) The direct additional costs, induced by the quantity of allowances that a sector would need to purchase if not deemed to be exposed to a significant risk of carbon leakage, were calculated on the basis of the data on direct CO2 emissions at sectoral level. The data in the European Union Transaction Log (EUTL) are considered to be the most accurate and transparent source of CO2 emissions data at installation level and have therefore been used to calculate the direct cost for sectors. For sectors and greenhouse gases only covered by the EU ETS from 1 January 2013, there are no emissions data in the EUTL available. Therefore, the Commission used the data on direct CO2 emissions provided by Member States in the National Implementation Measures (NIMs) pursuant to Decision 2011/278/EU in those cases. (9) In order to determine the indirect additional costs, the Commission collected data on electricity consumption at sectoral level from Member States, ensuring that no double counting of electricity consumed occurred between different NACE codes. To determine the emissions related to the production of electricity consumed by the different sectors for the list of sectors and subsectors in Decision 2010/2/EU, the Commission used the average emission factor derived from the total fuel mix for electricity production as it was considered to be based on the most accurate data. The same average emission factor has been used for the assessments underlying this Decision.

(10) Furthermore, to determine the direct and indirect additional costs, the Commission had to estimate the average carbon price. In order to establish the first list of sectors and subsectors an assumed carbon price of EUR 30 per tonne of CO2 equivalent was used for the assessments. In the period of application of Decision 2010/2/EU, there has been a substantial difference between the carbon price assumed for the assessments and the actual carbon price, the latter one being considerably lower. However, the Commission has in its Communication entitled A policy framework for the climate and energy in the period from 2020 to 2030 COM(2014)15 final/2 of 28 January 2014. proposed a 40 % unconditional greenhouse gas emission reduction target by 2030 as compared to 1990 and a corresponding renewable energy sources target. The Commission has also proposed to establish a market stability reserve in the EU ETS. Under those circumstances, it is expected that the carbon price will in the future be more strongly driven by mid- and long-term emission reductions. It is therefore considered justified to continue using an assumed carbon price of EUR 30 per tonne of CO2 equivalent for the assessments underlying this Decision. (11) The direct and indirect additional costs should be calculated as a share of gross value added. Regarding the estimation of gross value added at sectoral level, data from the Eurostat Structural Business Statistics have been used. (12) Furthermore, the Commission assessed the trade intensity for each sector and subsector on the basis of data obtained from the Eurostat Comext database. (13) In total, the Commission assessed 245 industrial sectors and 24 subsectors classified under the Mining and quarrying and Manufacturing divisions of the NACE classification. The sectors and subsectors listed in point 1 of the Annex to this Decision meet the criteria set out in Article 10a(15) and (16) of Directive 2003/87/EC and should be deemed as exposed to a significant risk of carbon leakage. (14) Assessments based on the qualitative criteria set out in Article 10a(17) of Directive 2003/87/EC have been carried out on a number of sectors that were not deemed to be exposed to the risk of carbon leakage based on the quantitative criteria set out in Article 10a(15) and (16). The qualitative assessment was carried out in cases which met the qualitative criteria in the context of the determination of the previous list, in cases of sectors considered to be borderline, and on request by industry representatives. (15) In the case of the sectors Finishing of textiles (NACE code 1330), Manufacture of bricks, tiles and construction products, in baked clay (NACE code 2332), Manufacture of plaster products for construction purposes (NACE code 2362), Casting of iron (NACE code 2451) and Casting of light metals (2453), the qualitative assessments carried out in the context of the determination of the previous list of sectors and subsectors, valid for 2013 and 2014, have been updated. It was concluded that the circumstances justifying the addition of those sectors to the list of sectors and subsectors still prevail. Therefore, those sectors should be deemed as exposed to a significant risk of carbon leakage also for the period 2015 to 2019.

(16) A qualitative assessment was carried out for the sector Manufacture of malt (NACE code 1106), as this sector represented a borderline case with regard to Article 10a(16b) of Directive 2003/87/EC. Taking into account the increased cost resulting from the implementation of Directive 2003/87/EC, the assessment demonstrated high trade intensity and a significant drop in the profitability of the sector in the Union. The low profit margins limit the capacity of installations to invest and reduce emissions. Based on the combined impact of those factors, the sector should be deemed as exposed to a significant risk of carbon leakage. (17) The sectors listed in point 2 of the Annex should be deemed as exposed to a significant risk of carbon leakage on the basis of the qualitative criteria. (18) As the list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage to be laid down in the Annex is to be valid for the period from 2015 to 2019, this Decision should apply from 1 January 2015. (19) For reasons of legal certainty and clarity, Decision 2010/2/EU should be repealed with effect from 1 January 2015. (20) The measures provided for in this Decision are in accordance with the opinion of the Climate Change Committee, HAS ADOPTED THIS DECISION:

Article 1

The sectors and subsectors listed in the Annex shall be deemed to be exposed to a significant risk of carbon leakage.

Article 2

Decision 2010/2/EU is repealed with effect from 1 January 2015.

Article 3

This Decision shall apply from 1 January 2015.

Article 4

This Decision is addressed to the Member States. Done at Brussels, 27 October 2014. For the Commission Connie Hedegaard Member of the Commission

Annex

ANNEX Sectors and subsectors which, pursuant to Article 10a(13) of Directive 2003/87/EC, are deemed to be exposed to a significant risk of carbon leakage

1. BASED ON THE CRITERIA SET OUT IN ARTICLE 10a(15) AND (16) OF DIRECTIVE 2003/87/EC 1.1. At the NACE-4 level The sector Manufacture of glass fibres is described by two CPA codes: 231411 Slivers, rovings, yarn and chopped strands, of glass fibre and 231412 Voiles, webs, mats, mattresses, boards and other articles of glass fibres, except woven fabrics. Assessed at the NACE-4 level, the sector does not meet the criteria set out in Article 10a(15) and (16) of Directive 2003/87/EC. However, subsector 231411 meets the criterion set out in Article 10a(16)(b), and subsector 231412 meets the criterion set out in Article 10a(15). As the two CPA codes cover the entire sector Manufacture of glass fibres, the sector is added to the list at NACE-4 level for ease of reference. NACE CodeDescriptionCriteria met0510Mining of hard coalC0610Extraction of crude petroleumC0620Extraction of natural gasC0710Mining of iron oresC0729Mining of other non-ferrous metal oresC0891Mining of chemical and fertiliser mineralsC0893Extraction of saltA0899Other mining and quarrying n.e.c.A, C1020Processing and preserving of fish, crustaceans and molluscsC1041Manufacture of oils and fatsC1062Manufacture of starches and starch productsA1081Manufacture of sugarA1086Manufacture of homogenised food preparations and dietetic foodC1101Distilling, rectifying and blending of spiritsC1102Manufacture of wine from grapeC1104Manufacture of other non-distilled fermented beveragesA1310Preparation and spinning of textile fibresC1320Weaving of textilesC1391Manufacture of knitted and crocheted fabricsC1392Manufacture of made-up textile articles, except apparelC1393Manufacture of carpets and rugsC1394Manufacture of cordage, rope, twine and nettingC1395Manufacture of non-wovens and articles made from non-wovens, except apparelC1396Manufacture of other technical and industrial textilesC

1399Manufacture of other textiles n.e.c.C1411Manufacture of leather clothesC1412Manufacture of workwearC1413Manufacture of other outerwearC1414Manufacture of underwearC1419Manufacture of other wearing apparel and accessoriesC1420Manufacture of articles of furC1431Manufacture of knitted and crocheted hosieryC1439Manufacture of other knitted and crocheted apparelC1511Tanning and dressing of leather; dressing and dyeing of furC1512Manufacture of luggage, handbags and the like, saddlery and harnessC1520Manufacture of footwearC1622Manufacture of assembled parquet floorsC1629Manufacture of other products of wood; manufacture of articles of cork, straw and plaiting materialsC1711Manufacture of pulpA, C1712Manufacture of paper and paperboardA1724Manufacture of wallpaperC1910Manufacture of coke oven productsA, C1920Manufacture of refined petroleum productsA2012Manufacture of dyes and pigmentsC2013Manufacture of other inorganic basic chemicalsA, C2014Manufacture of other organic basic chemicalsA, C2015Manufacture of fertilisers and nitrogen compoundsA, B2016Manufacture of plastics in primary formsC2017Manufacture of synthetic rubber in primary formsC2020Manufacture of pesticides and other agrochemical productsC2042Manufacture of perfumes and toilet preparationsC 2053Manufacture of essential oilsC2059Manufacture of other chemical products n.e.c.C2060Manufacture of man-made fibresC2110Manufacture of basic pharmaceutical productsC2120Manufacture of pharmaceutical preparationsC2211Manufacture of rubber tyres and tubes; retreading and rebuilding of rubber tyresC2219Manufacture of other rubber productsC2311Manufacture of flat glassA2313Manufacture of hollow glassA2314Manufacture of glass fibresA/C2319Manufacture and processing of other glass, including technical glasswareC2320Manufacture of refractory productsC2331Manufacture of ceramic tiles and flagsA, C2341Manufacture of ceramic household and ornamental articlesC2342Manufacture of ceramic sanitary fixturesC2343Manufacture of ceramic insulators and insulating fittingsC2344Manufacture of other technical ceramic productsC2349Manufacture of other ceramic productsC2351Manufacture of cementB2352Manufacture of lime and plasterB2370Cutting, shaping and finishing of stoneC2391Production of abrasive productsC2410Manufacture of basic iron and steel and of ferro-alloysA2420Manufacture of tubes, pipes, hollow profiles and related fittings, of steelC2431Cold drawing of barsC2441Precious metals productionC2442Aluminium productionA, C 2443Lead, zinc and tin productionA2444Copper productionC2445Other non-ferrous metal productionC2446Processing of nuclear fuelA, C2540Manufacture of weapons and ammunitionC2571Manufacture of cutleryC2572Manufacture of locks and hingesC2573Manufacture of toolsC2594Manufacture of fasteners and screw machine productsC2599Manufacture of other fabricated metal products n.e.c.C2611Manufacture of electronic componentsC2612Manufacture of loaded electronic boardsC2620Manufacture of computers and peripheral equipmentC2630Manufacture of communication equipmentC2640Manufacture of consumer electronicsC2651Manufacture of instruments and appliances for measuring, testing and navigationC2652Manufacture of watches and clocksC2660Manufacture of irradiation, electromedical and electrotherapeutic equipmentC2670Manufacture of optical instruments and photographic equipmentC2680Manufacture of magnetic and optical mediaC2711Manufacture of electric motors, generators and transformersC2712Manufacture of electricity distribution and control apparatusC2720Manufacture of batteries and accumulatorsC2731Manufacture of fibre optic cablesC2732Manufacture of other electronic and electric wires and cablesC2733Manufacture of wiring devicesC2740Manufacture of electric lighting equipmentC

2751Manufacture of electric domestic appliancesC2752Manufacture of non-electric domestic appliancesC2790Manufacture of other electrical equipmentC2811Manufacture of engines and turbines, except aircraft, vehicle and cycle enginesC2812Manufacture of fluid power equipmentC2813Manufacture of other pumps and compressorsC2814Manufacture of other taps and valvesC2815Manufacture of bearings, gears, gearing and driving elementsC2821Manufacture of ovens, furnaces and furnace burnersC2822Manufacture of lifting and handling equipmentC2823Manufacture of office machinery and equipment (except computers and peripheral equipment)C2824Manufacture of power-driven hand toolsC2825Manufacture of non-domestic cooling and ventilation equipmentC2829Manufacture of other general-purpose machinery n.e.c.C2830Manufacture of agricultural and forestry machineryC2841Manufacture of metal forming machineryC2849Manufacture of other machine toolsC2891Manufacture of machinery for metallurgyC2892Manufacture of machinery for mining, quarrying and constructionC2893Manufacture of machinery for food, beverage and tobacco processingC2894Manufacture of machinery for textile, apparel and leather productionC2895Manufacture of machinery for paper and paperboard productionC2896Manufacture of plastic and rubber machineryC2899Manufacture of other special-purpose machinery n.e.c.C2910Manufacture of motor vehiclesC 2931Manufacture of electrical and electronic equipment for motor vehiclesC3011Building of ships and floating structuresC3012Building of pleasure and sporting boatsC3030Manufacture of air and spacecraft and related machineryC3091Manufacture of motorcyclesC3092Manufacture of bicycles and invalid carriagesC3099Manufacture of other transport equipment n.e.c.C3109Manufacture of other furnitureC3211Striking of coinsC3212Manufacture of jewellery and related articlesC3213Manufacture of imitation jewellery and related articlesC3220Manufacture of musical instrumentsC3230Manufacture of sports goodsC3240Manufacture of games and toysC3250Manufacture of medical and dental instruments and suppliesC3291Manufacture of brooms and brushesC3299Other manufacturing n.e.c.C 1.2. At the CPA or Prodcom level CPA or ProdcomDescriptionCriteria met081221Kaolin and other kaolinic claysC08122250Common clays and shales for construction use (excluding bentonite, fireclay, expanded clays, kaolin and kaolinic clays); andalusite, kyanite and sillimanite; mullite; chamotte or dinas earthsC10311130Frozen potatoes, prepared or preserved (including potatoes cooked or partly cooked in oil and then frozen; excluding by vinegar or acetic acid)A 10311300Dried potatoes in the form of flour, meal, flakes, granules and pelletsA10391725Concentrated tomato puree and pasteC105121Skimmed milk powderC105122Whole milk powderC105153CaseinC105154Lactose and lactose syrupC10515530Whey and modified whey in powder, granules or other solid forms, whether or not concentrated or containing added sweetening matterA, C108211Cocoa paste, whether or not defattedC108212Cocoa butter, fat and oilC108213Cocoa powder, not containing added sugar or other sweetening matterC10891334Bakers' yeastC20111150HydrogenB20111160NitrogenB20111170OxygenB203021Prepared pigments, opacifiers and colours, vitrifiable enamels and glazes, engobes, liquid lustres and the like; glass fritC239914Artificial graphite; colloidal or semi-colloidal graphite; preparations based on graphite or other carbon in the form of semi-manufacturesC23991910Slag wool, rock wool and similar mineral wools and mixtures thereof, in bulk, sheets or rollsA23991920Exfoliated vermiculite, expanded clays, foamed slag and similar expanded mineral materials and mixtures thereofA25501134Open die forged ferrous parts for transmission shafts, camshafts, crankshafts and cranks etc.A, C

The criteria based on which a sector is deemed to be exposed to a significant risk of carbon leakage are the following: Acriterion set out in Article 10a(15) of Directive 2003/87/EC;Bcriterion set out in Article 10a(16)(a) of Directive 2003/87/EC;Ccriterion set out in Article 10a(16)(b) of Directive 2003/87/EC. 2. BASED ON THE CRITERIA SET OUT IN ARTICLE 10a(17) OF DIRECTIVE 2003/87/EC NACE CodeDescription1106Manufacture of malt1330Finishing of textiles2332Manufacture of bricks, tiles and construction products, in baked clay2362Manufacture of plaster products for construction purposes2451Casting of iron2453Casting of light metals