--- description: "Under the EU Emissions Trading System (EU ETS), a uniform cut to free allocation, used when installations' free allocation would exceed the maximum amount available. For each year from 2026 to 2030, it is 100%, so it cuts nothing." title: "Cross-sectoral correction factor: meaning and legal source" image: "https://greenfineprint.com/card/glossary/cross-sectoral-correction-factor.png?v=1ak5tnc" url: "https://greenfineprint.com/glossary/cross-sectoral-correction-factor" --- Glossary # Cross-sectoral correction factor Under the EU Emissions Trading System (EU ETS), a uniform cut to free allocation, used when installations' free allocation would exceed the maximum amount available. For each year from 2026 to 2030, it is 100%, so it cuts nothing. Legal source [Implementing Decision (EU) 2026/1862, Article 1 ↗](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32026D1862#art%5F1) Who it applies to Incumbent installations that receive free allocation: their final yearly amount is their preliminary amount multiplied by the factor. The factor also enters the free allocation adjustment under the Carbon Border Adjustment Mechanism (CBAM), which adjusts the number of CBAM certificates to be surrendered. Example An installation's only sub-installation is the heat benchmark sub-installation from our "Benchmark – EU ETS" entry: 1,000 terajoules (TJ) of measurable heat a year at 31.2 allowances per TJ, serving a sector deemed at risk of carbon leakage and producing no goods covered by CBAM. Its preliminary amount is 31,200 allowances a year, and at 100% the factor leaves it at 31,200 for each year from 2026 to 2030. Also known as CSCF, uniform cross-sectoral correction factor, correction factor The ETS Directive ([Directive 2003/87/EC](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02003L0087-20240301)) keeps [free allocation](https://greenfineprint.com/glossary/free-allocation) within a maximum amount, so that the share of allowances auctioned is respected. Where the sum of free allocations reaches that maximum, free allocations are adjusted in a uniform manner, and installations whose greenhouse gas emission levels are below the average of the 10% most efficient installations for the relevant benchmarks are exempt. An additional amount of up to 3% of the total quantity of allowances must be used, to the extent necessary, to raise the maximum. Once EU countries have notified their installations' preliminary amounts, the Commission determines the factor by comparing their sum with the amount available. Each incumbent installation's final yearly amount is its preliminary amount, the sum of its [sub-installations](https://greenfineprint.com/glossary/eu-ets-sub-installation), multiplied by the factor. An installation gets 100% instead if its sub-installations below the average of the 10% most efficient cover more than 60% of its preliminary amount. Implementing Decision (EU) 2026/1862 sets the uniform cross-sectoral correction factor at 100% for each year from 2026 to 2030. Its reason: part of the additional amount of up to 3% is used to raise the maximum for 2021 to 2030, so no cut is needed. Under the Carbon Border Adjustment Mechanism (CBAM), the free allocation adjustment to the number of CBAM certificates uses the cross-sectoral correction factor that the Commission determines under Article 14(6) of the Free Allocation Regulation. Our [free allocation explainer](https://greenfineprint.com/articles/eu-ets-free-allocation) shows where the factor sits in the calculation, after the [benchmark](https://greenfineprint.com/glossary/benchmark) and the factor for [carbon leakage](https://greenfineprint.com/glossary/carbon-leakage). Our [explainer on CBAM certificates](https://greenfineprint.com/articles/cbam-certificates-price-cost) covers the free allocation adjustment. ## Regulations DIRECTIVE 2003/87/EC In force Change pending ### [EU Emissions Trading System (EU ETS)](https://greenfineprint.com/regulations/eu-ets) Implementing Decision (EU) 2026/1862 set the cross-sectoral correction factor for free allocation at 100% for each year from 2026 to 2030 ## Used in DIRECTIVE 2003/87/EC, ART. 10A AND 10B In force Change pending ### [EU ETS free allocation: benchmarks, the carbon leakage list and how free allowances are cut](https://greenfineprint.com/articles/eu-ets-free-allocation) How EU ETS free allowances are worked out for 2026-2030: benchmarks, the carbon leakage list, the 20% conditions, the CBAM factor and two pending proposals. 15 min read REGULATION (EU) 2023/956 In force Change pending ### [EU CBAM certificate price: how certificates work and what they cost](https://greenfineprint.com/articles/cbam-certificates-price-cost) How the EU CBAM certificate price is set, when you can buy, the 50% quarterly holding rule, surrender by 30 September 2027, and a worked cost example. 10 min read ```json {"@context":"https://schema.org","@graph":[{"@type":"WebSite","@id":"https://greenfineprint.com/#website","name":"Green Fine Print","url":"https://greenfineprint.com/","inLanguage":"en","publisher":{"@id":"https://greenfineprint.com/#publisher"}},{"@type":"NewsMediaOrganization","@id":"https://greenfineprint.com/#publisher","name":"Green Fine Print","url":"https://greenfineprint.com/","logo":{"@type":"ImageObject","url":"https://greenfineprint.com/card/logo.png","width":512,"height":512}},{"breadcrumb":{"@id":"https://greenfineprint.com/glossary/cross-sectoral-correction-factor#breadcrumb"},"@type":"WebPage","@id":"https://greenfineprint.com/glossary/cross-sectoral-correction-factor","url":"https://greenfineprint.com/glossary/cross-sectoral-correction-factor","name":"Cross-sectoral correction factor: meaning and legal source","description":"Under the EU Emissions Trading System (EU ETS), a uniform cut to free allocation, used when installations' free allocation would exceed the maximum amount available. 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