Free Allocation Regulation (FAR) revision

Carbon Market Watch (CMW) opposes the current draft of the Free Allocation Regulation (FAR) revision, stating it increases free allowances for industrial sectors and contradicts the political mandate of the EU ETS Directive. CMW identifies critical failures in steel and cement benchmarking, the use of median production levels for Historical Activity Level (HAL) calculations, and an insufficiently ambitious reduction in free allowances for process emissions.

• The current FAR proposal is viewed as a 'watering down' of previous texts, resulting in increased free allowances for incumbent industrial sectors and a failure to align with the political mandate of the EU ETS Directive review.
• Steel benchmarks fail to follow the 'one product = one benchmark' principle because they remain linked to production processes, specifically benchmarking hot metal/DRI rather than flat steel output, which CMW argues hinders GHG emission reductions and scrap re-use.
• Cement benchmarks are criticized for being expressed in tons of clinker, which CMW claims penalizes most supplementary cementitious materials (SCMs) and fails to support technological innovations that lower the most polluting components of cement manufacturing.
• The proposal to calculate Historical Activity Level (HAL) using a median level of annual production instead of an arithmetic average is seen as a regulatory inconsistency that would lead to the overallocation of free allowances by ignoring production drops during the pandemic and energy price crisis.
• The proposed reduction value for process emissions not covered by product benchmarks is considered too lenient at 91% with enforcement only from 2028, especially compared to earlier proposals of 79%, which CMW argues will undermine the decarbonisation of heavily polluting processes.

APA

Carbon Market Watch (2023). Free Allocation Regulation (FAR) revision. https://carbonmarketwatch.org/wp-content/uploads/2023/12/20231218-CMW-feedback-on-FAR.pdf

Chicago

Carbon Market Watch. Free Allocation Regulation (FAR) revision. 2023. https://carbonmarketwatch.org/wp-content/uploads/2023/12/20231218-CMW-feedback-on-FAR.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Free Allocation Regulation (FAR) revision |date=19 December 2023 |url=https://carbonmarketwatch.org/wp-content/uploads/2023/12/20231218-CMW-feedback-on-FAR.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2023free, author = {{Carbon Market Watch}}, title = {{Free Allocation Regulation (FAR) revision}}, publisher = {Carbon Market Watch}, year = {2023}, month = dec, url = {https://carbonmarketwatch.org/wp-content/uploads/2023/12/20231218-CMW-feedback-on-FAR.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }