#3_CS Cired_Working PAper_final

The research paper evaluates nine climate policy scenarios to determine the most effective way to address carbon leakage in the EU ETS. Using the CASE II model, it compares full auctioning against various border adjustment (BA) and output-based allocation (OB) strategies. The findings suggest that while full auctioning leads to a leakage ratio of 10%, border adjustments are the most efficient at reducing this ratio, often resulting in negative leakage (spillovers) where emissions in the rest of the world actually decrease. Output-based allocations also reduce leakage but are less efficient than border adjustments and can lead to higher carbon prices.

• Under a scenario of 100% auctioning of allowances without border adjustments, the aggregate leakage ratio is 10%, which the authors describe as a "benign problem".
• Border adjustment policies are more efficient than output-based allocations at preventing leakage, with most BA scenarios resulting in a negative leakage ratio.
• In the cement sector, the share of imported clinker in EU production increases from 6% in the business-as-usual scenario to 15% under full auctioning.
• The most effective output-based allocation variant for reducing leakage is one that combines auctioning in the power sector with output-based allocation for direct and indirect emissions in the cement, steel, and aluminium sectors, reducing the aggregate leakage ratio to 1.7%.
• Full auctioning leads to an increase in electricity prices of 3% for households and 5% for industry.

APA

Climate Strategies (n.d.). #3_CS Cired_Working PAper_final. https://climatestrategies.org/wp-content/uploads/2014/11/3-cs-cired-working-paper-final.pdf

Chicago

Climate Strategies. #3_CS Cired_Working PAper_final. n.d. https://climatestrategies.org/wp-content/uploads/2014/11/3-cs-cired-working-paper-final.pdf.

Wikipedia

{{cite report |author=Climate Strategies |title=#3_CS Cired_Working PAper_final |url=https://climatestrategies.org/wp-content/uploads/2014/11/3-cs-cired-working-paper-final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatestrategiesnd3cs, author = {{Climate Strategies}}, title = {{\#3\_CS Cired\_Working PAper\_final}}, institution = {Climate Strategies}, url = {https://climatestrategies.org/wp-content/uploads/2014/11/3-cs-cired-working-paper-final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }