| Please note, this calculator is purely for educational purposes, and should not be used for serious financial calculations. Decerna provides these for free to help organisations learn about carbon calculations, and become more aware. |
EU ETS Compliance Cost Calculator
Installation Details
Free Allocation Parameters
Auto-populated based on sector
Phase 4 default: 1.00 for sectors on carbon leakage list
Market Parameters
Annual Compliance Position:
Verified Emissions (tCO2):
0
Free Allocation (EUAs):
0
Deficit/Surplus (EUAs):
0
Annual Compliance Cost (€):
0
5-Year Cost Forecast:
| Year | EUA Price (€) | Free Allocation | Cost (€) |
|---|
Understanding EU ETS Compliance Costs
The EU Emissions Trading System (EU ETS) is the world’s largest carbon market and a cornerstone of EU climate policy. Understanding your compliance costs is crucial for financial planning and decarbonisation strategy.
Key Components of ETS Costs
- Direct Emissions Coverage
- Verified emissions from regulated activities
- Free allocation of allowances
- Requirement to surrender allowances
- Price Factors
- Current ETS allowance price
- Price forecasts
- Trading and hedging costs
- Free Allocation
- Based on benchmarks
- Carbon Leakage Exposure Factor
- Cross-Sectoral Correction Factor
- Activity Level adjustments
Mathematical Basis
The compliance cost calculation follows this formula:
Net Compliance Cost = (Verified Emissions × EUA Price) -
(Free Allocation × EUA Price) +
Transaction Costs
Where:
Free Allocation = Benchmark × Historic Activity Level ×
Carbon Leakage Factor × Cross-Sectoral Correction Factor ×
Activity Level Change Factor
Annual Compliance Cost = Net Allowances Required × Projected Carbon Price +
Administrative Costs
Projected Costs = Baseline Cost × (1 + Annual Reduction Factor)^YearData sources:
- EUA prices: ICE/EEX market data
- Benchmarks: Commission Implementing Regulation 2021/447
- Carbon Leakage Factors: Commission Delegated Decision 2019/708
- Cross-Sectoral Correction: Annually updated Commission values
- Default emission factors: Commission Regulation 2018/2066
