The analysis comes in response to pressing concerns by heavy industry that imposing overly-stringent climate legislation in Europe would merely drive away business, jobs and emissions to other countries.
The Commission's methodology, outlined in a non-paper obtained by ENDS Europe, indicates "that primary aluminium, hot rolled steel and slabs [...] and clinker would be likely to be strongly affected would therefore be amongst the substances likely to benefit from partial to totally free allocations".
But the EU executive also maintains that these sectors were chosen only for "indicative purposes on the basis of the data available at this point, and should not be taken to prejudge the final results," according to the non-paper.
Brussels now plans to extend its assessment to ceramics, chemicals, pulp and paper, copper and a number of other industries listed in the annex of the non-paper.
Risk assessment
The non-paper lists three main factors for determining a possible list of exempt sectors and/or sub-sectors.
First, sectors and sub-sectors "where problems may occur" should be identified, whereby the likely cost impact of the EU ETS (notably in terms of electricity price increases), coupled with the level of that sector's exposure to non-EU trade, are measured.
Next, transportation, geographical location, market concentration and other factors could then be fed into the equation in "a qualitative manner which will help refine the assessment". Lastly, the outcome of international climate talks, including any sectoral deals agreed between industries, would "allow for a further refinement".
Four categories
The non-paper divides potentially affected sectors and sub-sectors into four categories, from those exposed to zero or low risk of carbon leakage (category I) to those exposed to high risk (category IV).
While the Commission insists that all sectors would need to submit to full auctioning by 2020, category IV sectors would receive 100% free allowances in 2013, followed by a phase-in of full auctioning during the subsequent seven-year period.
Those exposed to moderate to high risk of carbon leakage (cateogories II and III) would receive less than 100% free allowances in 2013 and would be subject to phase-in towards full auctioning, but at a "slower pace".
