A joint UK-France proposal to introduce four tiers of post-2020 free EUA allocation would benefit chemical plants and refineries companies at the expense of other industries including cement and heat, according to consultancy Ecofys.

In a blog post, Ecofys said the “balanced high risk” scenario in the two governments’ recent non-paper would hand 136 million and 182 million more free EUAs to the chemicals and refineries sectors respectively over 2021-2030, while cement and heat would get 51 million and 182 million fewer.

This is compared to the European Comission’s proposal, which outlines just two tiers of free allocation for carbon leakage protection.

Ecofys added that the “balanced high risk” scenario would also leave more allowances unused than the four-tier method outlined in the European Commission’s impact assessment, “in contrast to the claim made in UK-French non-paper” that fewer would go unused.

The European Commission will on Thursday hold a technical discussion to assess whether the Cross-Sectoral Correction Factor (CSCF) will be necessary after 2020. The invite-only session will be webstreamed and evaluate the views of several analysts, many of whom expect the CSCF to be required only very late next decade, if at all.

By Ben Garside – ben@carbon-pulse.com