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Industrial Decarbonisation: Net Zero Carbon Policies to Mitigate Carbon Leakage and Competitiveness Impacts (Energy Systems Catapult)

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1. Outline

The Climate Change Committee (CCC) commissioned a piece of research from Energy Systems Catapult about the Net Zero carbon policies to mitigate carbon leakage and the impact on competitiveness. Concerns about the impact of carbon policies (including pricing, regulation, subsidies, and standards) on competitiveness and carbon leakage particularly affect energy-intensive, trade-exposed (EITE) industries. EITE industries can be constrained in their ability to pass through carbon policy costs due to international competition. In light of Net Zero ambitions, this poses a unique challenge for carbon policy design. In this report, the Energy Systems Catapult:

  • Set out policy options for both (a) enabling deep decarbonisation of industry in line with Net Zero pathways and (b) mitigating carbon leakage and competitiveness impacts
  • Evaluate these policy options
  • Consider potential timings and phasing of implementation.

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