The EU Emissions Trading System (EU ETS) is the most important European instrument for climate protection and in Germany covers about half of CO2 emissions. Since 2009 the KfW/ZEW CO2 Barometer has been surveying all German companies covered by the EU Emissions Trading Scheme on their activities and strategies in emissions trading.

The decline in certificate prices by at times 50 per cent in 2011 resulting from the heavy overallocation of emission rights to companies across the EU led again to increasing discussions on the weak incentive effects of the EU ETS. At the same time, the industry has argued and continues to argue that the cost burden through the EU ETS places European companies at a disadvantage in international competition, forcing them to increasingly invest outside of Europe and move production sites abroad ("investment leakage"). The result would be an undesirable transfer of CO2 emissions beyond the regulatory reach of the EU ETS to less strongly regulated countries and regions ("carbon leakage").

In addition to the incentive effect of the EU ETS and the abatement activities of regulated companies, the current CO2 Barometer mainly focuses on how strongly the costs of climate policy regulations actually impact the production and investment decisions of companies. The results of this year's company and expert surveys reveal a much more differentiated picture of the climate protection efforts of regulated companies and their global capacity expansion efforts than is currently widely discussed in the public realm.

Brockmann, Karl Ludwig, Peter Heindl, Andreas Löschel, Benjamin Johannes Lutz and Jan Schumacher (2012), KfW/ ZEW CO2 Barometer 2012, KfW Bankengruppe, Frankfurt am Main. Download