Carbon cost means the estimated maximum cost faced by a sector induced by the implementation of the European Union Emissions Trading Scheme (EU ETS). It is calculated as the sum of:


- The direct costs associated with direct emissions, i.e. the emissions not covered by free allocation;


- The indirect costs associated with cost of indirect emissions (emissions from electricity consumption) as the result of potential increase of electricity prices induced by the inclusion electricity production in the scope of the EU ETS.


The possibility of certain sectors to (partly) pass through the EU ETS costs to their customers and any state aid provided pursuant to Article 10a(5) of the EU ETS Directive are not taken into account.


Source: Commission Staff Working Document Impact Assessment Accompanying the document Commission Decision determining, pursuant to Directive 2003/87/EC of the European Parliament and the Council, a list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage for the period 2015-2019