Glossary

EnergyAilexi — Word of the Day

Emissions Trading System (ETS) Cross-Sectoral Correction Factor (CSCF)

Greenhouse Gas Emissions

A regulatory mechanism within certain ETS designs, such as the old EU ETS Phase 3, that adjusts the total number of allowances for non-electricity sectors (e.g., cement and steel) due to an overallocation or unexpected cap alignment. It exposes emission-intensive, trade-exposed industries to abrupt cost increases and can trigger carbon leakage if not layered with free allocation. The CSCF is an often-overlooked compliance risk driver.

The ETS cross-sectoral correction factor is the hidden throttle on industrial carbon costs. It hits steel where it hurts—cash flow.
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