The Final Carbon Fatcat

The report argues that the EU ETS has failed to incentivise emissions reductions in the cement sector, instead acting as a production subsidy for high-carbon clinker. Due to coarse free allocation rules and an inaccurate carbon leakage list, the sector has accumulated significant allowance surpluses, with five major companies receiving nearly €1 billion in free allowances between 2008 and 2014. This has led to 'reverse carbon leakage,' where emissions are imported into the EU through clinker exports. The authors recommend introducing more granular production thresholds for allocation, a tiered system for leakage protection, and additional non-ETS policies to support carbon capture and non-Portland cement innovations.

• The EU ETS has created perverse incentives that likely increased cement sector emissions by more than 15 million tonnes beyond business-as-usual levels, effectively importing emissions into the EU.
• Five major cement companies, termed 'Carbon Fatcats,' collectively received nearly €1 billion in spare EU allowances (EUAs) for free between 2008 and 2014.
• Current free allocation rules are too coarse, only adjusting if production falls by 50% or more, which encourages companies to maintain production just above this threshold to retain 100% of their allowances.
• The cement sector is over-allocated because it is treated as fully leakage-exposed despite not meeting the minimum trade intensity criterion, allowing it to receive 100% of its benchmarked free allocation.
• The report estimates that if 10% adjustments were applied for every 10% variation in activity levels during Phase 3, nearly 180 million EUAs would have been withheld from the cement sector.
• Carbon Capture, Utilisation, and Storage (CCUS) is essential for the future of Portland cement in Europe, as process emissions (two-thirds of total emissions) are otherwise unavoidable.
• Decarbonisation progress via fuel switching has been uneven across the EU, with some Western European countries lagging behind Eastern European Member States.
• Non-Portland and carbon-negative cements face barriers including a lack of proper certification and European norms (EN 197 and EN 206) that are too focused on the Portland paradigm.

APA

Luta, A., & Lytton, W. (2016). The Final Carbon Fatcat. Ember. https://ember-energy.org/app/uploads/2020/03/The-Final-Carbon-Fatcat-Sandbag-March-2016.pdf

Chicago

Luta, Alex, and Wilf Lytton. The Final Carbon Fatcat. Ember, 2016. https://ember-energy.org/app/uploads/2020/03/The-Final-Carbon-Fatcat-Sandbag-March-2016.pdf.

Wikipedia

{{cite report |last1=Luta |first1=Alex |last2=Lytton |first2=Wilf |title=The Final Carbon Fatcat |publisher=Ember |date=March 2016 |url=https://ember-energy.org/app/uploads/2020/03/The-Final-Carbon-Fatcat-Sandbag-March-2016.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{luta2016final, author = {Luta, Alex and Lytton, Wilf}, title = {{The Final Carbon Fatcat}}, institution = {Ember}, year = {2016}, month = mar, url = {https://ember-energy.org/app/uploads/2020/03/The-Final-Carbon-Fatcat-Sandbag-March-2016.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }