The effects of carbon prices and anti-leakage policies on selected industrial sectors

The report uses three sector-specific engineering models to evaluate how carbon prices affect the competitiveness and leakage risk of Spain's cement, steel, and oil refining industries. It finds that coastal cement regions and the oil refining sector are particularly vulnerable to leakage, while the steel sector's risk is mitigated by a high prevalence of Electric Arc Furnace (EAF) technology. The authors suggest that border tax adjustments are generally more effective and practical than output-based free allocations for reducing leakage in these sectors.

• The Spanish cement sector is highly vulnerable to carbon leakage in coastal regions, where carbon prices exceeding 18€/ton could lead to imports covering approximately 90% of demand. Conversely, inland regions face almost no leakage risk at 35€/ton due to high transport costs for clinker, which act as a natural trade barrier.
• In the steel sector, Blast Oxygen Furnace (BOF) production becomes unprofitable at carbon prices around 12€/ton. Electric Arc Furnace (EAF) production is more resilient, remaining profitable up to 20€/ton, which reduces Spain's overall leakage risk compared to other European countries with more BOF capacity.
• The oil refining sector faces a significant risk of leakage, with net margins decreasing dramatically at carbon prices over 19€/ton and potential net losses occurring above 40€/ton. This risk is exacerbated by excess refining capacity in Asia and Arab countries and the high demand for diesel in Europe.
• Border tax adjustments are identified as a more practical solution for reducing leakage than output-based free allocations. For steel, a border tax of approximately 5% (around 34€ per ton of imported steel) could eliminate leakage, whereas free allocations would need to be as high as 50% to 75% of total emissions.
• For the cement sector, the report argues that output-based free allocations are likely ineffective because there are few domestic abatement options; therefore, any such policy would merely remove the carbon price signal without improving competitiveness against imports.

APA

Linares, P., & Santamaría, A. (2012). The effects of carbon prices and anti-leakage policies on selected industrial sectors. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/comillaspaper-formatted-2-final.pdf

Chicago

Linares, Pedro, and Alberto Santamaría. The effects of carbon prices and anti-leakage policies on selected industrial sectors. Climate Strategies, 2012. https://climatestrategies.org/wp-content/uploads/2014/11/comillaspaper-formatted-2-final.pdf.

Wikipedia

{{cite report |last1=Linares |first1=Pedro |last2=Santamaría |first2=Alberto |title=The effects of carbon prices and anti-leakage policies on selected industrial sectors |publisher=Climate Strategies |date=2012 |url=https://climatestrategies.org/wp-content/uploads/2014/11/comillaspaper-formatted-2-final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{linares2012effects, author = {Linares, Pedro and Santamaría, Alberto}, title = {{The effects of carbon prices and anti-leakage policies on selected industrial sectors}}, institution = {Climate Strategies}, year = {2012}, url = {https://climatestrategies.org/wp-content/uploads/2014/11/comillaspaper-formatted-2-final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }