L 1/10 Official Journal of the European Union 5.1.2010 COMMISSION DECISION of 24 December 2009 determining, pursuant to Directive 2003/87EC of the European Parliament and of the Council, a list of sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage (notified under document C(2009) 10251) (Text with EEA relevance) (2010/2/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the functioning of the European Union, Having regard to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (1), and in particular Article 10a(13) thereof, Whereas: () ¢ O] 0] Directive 2003/87/EC, as amended by Directive 2009/29/EC of the European Parliament and of the Council (), provides that auctioning should be the basic principle for allocation of greenhouse gas emission allowances. The Union supports an ambitious international agreement on climate change that aims to limit the global temperature increase to 2 °C. In the event that other developed countries and other major emitters of greenhouse gases do not participate in that international agreement, this could lead to an increase in greenhouse gas emissions in third countries where industry would not be subject to comparable carbon constraints (carbon leakage’) and undermine the environmental integrity and benefit of actions by the Union. To address the risk of carbon leakage, Directive 2003/87[EC provides that, subject to the outcome of the international negotiations, the Union should allocate allowances free of charge at 100 % of the quantity determined in accordance with the measures referred to in Article 10a(l) of Directive 2003/87/EC to sectors or sub-sectors deemed to be exposed to a significant risk of carbon leakage. By 31 December 2009 and every five years thereafter, the Commission shall determine a list of the sectors or L 275, 25.10.2003, p. 32. L 140, 5.6.2009, p. 63. subsectors deemed to be exposed to a significant risk of carbon leakage, hereinafter ‘list of sectors and subsectors’, on the basis of the criteria referred to in paragraphs 14 to 17 of Article 10a of Directive 2003/87EC. According to Article 10a(14) of Directive 2003/87/EC, in order to determine the sectors or subsectors deemed to be exposed to a significant risk of carbon leakage the Commission shall assess, at Union level, the extent to which it is possible for the sector or subsector concerned, at the relevant level of disaggregation, to pass on the direct cost of the required allowances and the indirect costs from higher electricity prices resulting from the implementation of Directive 2003/87/EC into product prices without significant loss of market share to less carbon efficient installations outside the Union. These assessments shall be based on an average carbon price according to the Commission’s impact assessment accompanying the package of implementation measures for the Union’s objectives on climate change and renewable energy for 2020 and, if available, trade, production and value added data from the three most recent years for each sector or subsector. In accordance with Article 10a(15) of Directive 2003/87[EC, a sector or subsector shall be deemed to be exposed to a significant risk of carbon leakage if the sum of direct and indirect additional costs induced by the implementation of that Directive would lead to a substantial increase of production costs, calculated as a proportion of the gross value added, of at least 5 %; and the intensity of trade with third countries, defined as the ratio between the total value of exports to third countries plus the value of imports from third countries and the total market size for the Union (annual turnover plus total imports from third countries), is above 10 %. In accordance  with  Article 10a(16) of Directive 2003/87[EC, a sector or subsector is also deemed to be exposed to a significant risk of carbon leakage if the sum of direct and indirect additional costs induced by the implementation of Directive 2003/87/EC would lead to a particularly high increase of production costs, calculated as a proportion of the gross value added, of at least 30 %, or the intensity of trade with third countries, defined as the ratio between the total value of exports to third countries plus the value of imports from third countries and the total market size for the Union (annual turnover plus total imports from third countries), is above 30 %.