European Union nations will be able to compensate some big energy users, including steel and aluminium producers, for extra costs resulting from changes to the EU Emissions Trading System (ETS) beginning next year, the Commission confirmed yesterday (22 May).

A draft last month had already shown EU member states from 2013 would be able to shield big industry, to try to prevent so-called carbon leakage, which happens when rising costs drive business out of Europe.

"If production shifts from the EU to third countries with less environmental regulation, this could undermine our objective of a global reduction of greenhouse gas emissions," Competition Commissioner Joaquín Almunia said in a statement.

From next year, the EU's ETS expands to include more sectors and fewer permits will be handed out for free, meaning polluters will have to pay for them through auctions and power costs could rise.

Sectors judged eligible for compensation to make up for some of the expected extra energy cost, include producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and some plastics.

The aluminium sector and other big users have lobbied hard, saying the expected increase to their power costs when the ETS enters its next phase could be crippling.