Report Fertilizers Europe: Critical review of a recent report on cost pass-through and carbon leakage
In November 2015, the consultancies CE Delft and Oeko-Institute published a report, CE Delft (2015) that assessed the extent to which a selected number of energy-intensive manufacturing industries increased their sales prices as they experienced higher input costs from being included in the ETS system.
The report was commissioned by the European Commission with the underlying purpose to shed light on the risk higher production costs for EU producers caused by EU climate policies cause production and investment in these industries to move to non-EU location. This is what has been called carbon leakage. In this note, we focus on the part of the report looking at the fertilizer industry, but most of the arguments put forward and the conclusions drawn are general and do not hinge on sector-specific characteristics.