Additional profits of sectors and firms from the EU ETS 2008-2019

Between 2008 and 2019, fifteen CO2-intensive industrial sectors in nineteen EU countries earned estimated additional profits between €30 billion and over €50 billion from the EU ETS. These profits were derived from three primary sources: the overallocation of free emission allowances, the use of cheaper international credits (CERs/ERUs) for compliance, and the passing through of opportunity costs of free allowances into product prices. The iron and steel sector was the largest beneficiary, with profits ranging from €11.9 billion to €16.1 billion. In contrast, the aviation sector experienced a net loss of €151.2 million due to the need to purchase allowances. The report argues that free allocation may no longer be fit for purpose and recommends increasing the share of auctioning combined with targeted investment subsidies or a Carbon Border Adjustment Mechanism (CBAM) to reduce windfall profits and encourage decarbonization.

• Total additional profits for the fifteen industrial sectors across nineteen countries between 2008 and 2019 are estimated to be between €30 billion and over €50 billion.
• The iron and steel sector earned the highest absolute additional profits, estimated between €11.9 billion and €16.1 billion, followed by the cement sector (€7.1 to €10.3 billion) and refineries (€5.9 to €11.3 billion).
• Cost pass-through—forwarding the opportunity costs of free allowances into product prices—was the largest source of additional profits, contributing between €26 billion and €46 billion.
• Industry earned €3 billion in additional profits by using cheaper international credits (CERs and ERUs) for compliance instead of EU allowances between 2008 and 2019, with the iron and steel sector benefiting the most (€850 million).
• Overallocation of free allowances resulted in €1.6 billion in additional profits, as industry received 37 Mt more allowances than needed. The cement and building materials sectors (bricks and lime) were the primary beneficiaries, earning around €4 billion.
• The aviation sector did not experience the same windfall profits as industry, recording a total balance loss of €151.2 million because the costs of buying allowances outweighed the gains from cost pass-through and international credits.
• Analysis of installations shows that 63% of industrial installations did not have to pay for any emission allowances between 2008 and 2019.
• The report concludes that free allocation may not be fit for purpose for future European climate policies, as it generates profits at the expense of consumers and may not effectively prevent carbon leakage.
• To reduce additional profits, the report recommends drastically reducing free allowances and increasing auctioning, potentially paired with investment subsidies (e.g., via the Innovation Fund) or a Carbon Border Adjustment Mechanism (CBAM).

APA

de Bruyn, S., Juijn, D., & Schep, E. (2021). Additional profits of sectors and firms from the EU ETS 2008-2019. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2021/06/CE_Delft_Additional_Profits_ETS.pdf

Chicago

de Bruyn, Sander, Daan Juijn, and Ellen Schep. Additional profits of sectors and firms from the EU ETS 2008-2019. Carbon Market Watch, 2021. https://carbonmarketwatch.org/wp-content/uploads/2021/06/CE_Delft_Additional_Profits_ETS.pdf.

Wikipedia

{{cite report |last1=de Bruyn |first1=Sander |last2=Juijn |first2=Daan |last3=Schep |first3=Ellen |title=Additional profits of sectors and firms from the EU ETS 2008-2019 |publisher=Carbon Market Watch |date=May 2021 |url=https://carbonmarketwatch.org/wp-content/uploads/2021/06/CE_Delft_Additional_Profits_ETS.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{debruyn2021additional, author = {de Bruyn, Sander and Juijn, Daan and Schep, Ellen}, title = {{Additional profits of sectors and firms from the EU ETS 2008-2019}}, institution = {Carbon Market Watch}, year = {2021}, month = may, url = {https://carbonmarketwatch.org/wp-content/uploads/2021/06/CE_Delft_Additional_Profits_ETS.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }