The majority of EIUG members prefer to continue to use the existing Carbon Leakage List, this is because they consider the quality of the UK data for their sectors – in terms of accuracy and reliability – too poor to justify a change to a carbon leakage list based on UK data. Those who prefer a list based on UK data, such as the cement and lime sector, find their sectoral data used to determine their risk of carbon leakage generally accurate.
The EIUG recognises that the data used to calculate emissions intensity and trade intensity are probably the best available from public sources, but are far from accurate for some sectors. In particular, the ONS data in the ABS and APS do not necessarily reflect reality in some sectors. Additionally, some companies registered under certain SIC codes, also does not reflect reality.
Many stakeholders have tried to reproduce their CLI figures based on these data sources, but have often not been able to. Reproducibility of statistical indicators is a necessary condition for their faithfully measuring the reality they have been designed to represent. The CLI figures are therefore not particularly reliable.
Due to the inaccuracy and unreliability of the data sets, the EIUG cautions for overreliance on these data sets and recommends an additional qualitative assessment for those sector who are borderline or so-called edge cases, the European Commission has as offered for the current EU ETS based list, if the Authority were to move to a carbon leakage list based on UK data.
The EIUG fundamentally disagrees with the Authority’s arguments not to make an adjustment to CLI values for CBAM sectors and recalculate Free Allocations from 2027 on this new basis. It also suggests that the following assessment criteria should be added for consideration:
Contribution to economic growth: this is the Government’s key objectives and should therefore also be included in the assessment criteria.
Effectiveness of the UK CBAM: if the UK CBAM is not as effective as expected and free allocation are withdrawn then the policies fail on their objectives to mitigate the risk of carbon leakage. The UK CBAM’s effectiveness is a necessary condition for any assessment to change free allocations.