Impacts of the EU emissions trading scheme on the industrial competitiveness in Germany
An intended effect of the EU Emissions Trading Scheme (EU ETS) is the reflection of greenhouse gas emissions related costs in the production costs of installations covered by the Directive. To the extent that the additional costs of covering greenhouse gas emissions are passed-through and included in product prices, the EU ETS also increases costs on the demand side, including electricity-intensive industries (e.g. aluminium industry). Since the EU ETS only covers installations located in the EU, this partial implementation of climate policy may lead to competitiveness distortions for carbon- and energy intensive companies in the EU.