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The report assesses how the EU ETS affects industrial competitiveness, identifying that while most sectors can profit in the short term through free allowances and cost pass-through, a small number of carbon-intensive subsectors face significant risks. Using UK and German data, the authors develop 'Value at Stake' indicators to screen for exposed activities. The analysis concludes that leakage concerns are concentrated in a few subsectors, particularly cement and blast furnace steel, where high direct emissions and international tradeability create vulnerability. The report argues that free allocation can mitigate these risks but may create perverse incentives, suggesting that targeted policies or harmonized allocation across EU Member States are necessary to maintain economic performance while achieving emission reductions.