Carbon Fat Cats 2009

A company analysis of the EU ETS

Damien Morris

3 September 2010 | < 1 min read

Executive summary

Massive surpluses in 2008 grew by 86 million tonnes in 2009

Nearly a quarter of the surpluses in the entire scheme are in the hands of just 10 companies

Earlier this year, our Carbon Fatcats report took a snapshot of the 10 most over-allocated companies in 2008. Now with the 2009 data available we can investigate how these same companies have fared another year into the Phase, as the recession has further depressed production levels.

In each case we find that the massive surpluses in 2008 were greatly augmented in 2009. In 2008 these top ten companies held 33 million excess permits. In 2009 this grew by 86 million tonnes, bringing them to 119 million permits so far this Phase. We find that nearly a quarter of the surpluses in the entire scheme are concentrated in the hands of just 10 companies.

In our overview of Phase II and Phase III, we find that the fatcats’ buffer of Phase II surpluses would not only protect them from making any emissions cuts across Phase III but would allow them room to grow their emissions 50% from 2009 levels by 2020. These disproportional overallocations have led to competitive distortions between industrial companies. While benchmarking of free allocations will mitigate against disproportionate overallocation in Phase III, the playing field will remain uneven until these benchmarks account and correct for lopsided allocation in Phase II which can provide either a direct financial head-start to these companies (if sold), or a hedge against carbon exposure (if banked forward).