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Symposium 2015

The EU’s Emission Trading System: More Than Hot Air?

The Challenge

The EU's emissions trading system (EU-ETS) is the largest existing emissions trading scheme. This scheme is the main economic climate policy instrument of the EU, and it also serves as a blueprint for other emissions trading schemes world-wide.

In 2014, the EU agreed on new and ambitious emissions reduction targets for 2030. While the EU-ETS is considered a key instrument in reaching these new targets, its effectiveness has been impeded by low carbon prices that fall short of providing the necessary incentives for urgently needed technological changes. So far, attempts to change this incentive structure have failed. The Reform proposed by the European Commission, the so-called Market Stability Reserve, will probably not go far enough for various reasons.

What mechanisms are necessary to ensure the necessary flexibility to react to unexpected market developments, such as the financial crisis, which drove down energy prices? Would such mechanisms include price floors and ceilings? If so, what is needed to make national and European policy-makers adopt these measures, and how should they be implemented? Additionally, should the EU-ETS also be extended to more sectors and gases? What provisions should be included to avoid negative effects on European businesses? In what way should national emissions targets be defined in the future, given that a large share is regulated by the EU-ETS? What role may be played by NGOs focusing on the environmental effectiveness of the EU-ETS?

This session is organized by Sonja Peterson, Kiel Institute for the World Economy. Please check out the tabs below for additional facts and information.

    Solutions

    Solution
    Symposium 2015

    A Long-Term Approach for the EU’s Climate and Energy Policies

    A Long-Term Approach for the EU’s Climate and Energy Policies

    A Long-Term Approach for the EU’s Climate and Energy Policies

    Solution
    Symposium 2015

    An EU ETS Reform Package

    An EU ETS Reform Package

    An EU ETS Reform Package

    Solution
    Symposium 2015

    Back to Basics: Reinstating the Focus on Emissions Reduction

    Back to Basics: Reinstating the Focus on Emissions Reduction

    Back to Basics: Reinstating the Focus on Emissions Reduction

    Background Paper

    Background Paper
    Symposium 2015

    Reforming the EU’s Emissions Trading System

    Polity, Academia, Business, Civil Society

    Virtual Library

    Virtual Library File
    Symposium 2015

    Reform of the EU carbon market. From backloading to the market stability reserve. European Parliament Research Service.

    This briefing of the EU Parliament nicely summarizes the functioning of the EU-ETS, recent developments and the status quo of the debates for reforming the EU-ETS. Overall the brief provides the neces ...

    This briefing of the EU Parliament nicely summarizes the functioning of the EU-ETS, recent developments and the status quo of the debates for reforming the EU-ETS. Overall the brief provides the necessary political background against which to judge innovative reform proposals.

    Virtual Library File
    Symposium 2015

    EU Emissions Trading Scheme Reform: a change for the better?

    Carlo Carraro, Director of the International Centre for Climate Governance sees that the EU ETS reforms are moving the carbon market into the right direction while the 2030 policy framework sends some ...

    Carlo Carraro, Director of the International Centre for Climate Governance sees that the EU ETS reforms are moving the carbon market into the right direction while the 2030 policy framework sends some mixed signals. He supports -  if well managed -  a Market Stability Reserve since it may provide markets with short term price incentives much more effective than those sent in the last decade.

    Virtual Library File
    Symposium 2015

    The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?

    These experienced economic researchers argue that current reform proposals are not sufficient and that  “a robust strategy to save the European climate policy should combine an attempt to reform of ...

    These experienced economic researchers argue that current reform proposals are not sufficient and that  “a robust strategy to save the European climate policy should combine an attempt to reform of the ETS through the introduction of a price floor (and possibly a price ceiling), and the development of complementary policies, even in the electricity sector whose emissions are covered by the ETS, both because the ETS reform may fail and because the ETS cannot address all the relevant market failures”.

    Virtual Library File
    Symposium 2015

    Reform Options for the European Emissions Trading Scheme (EU-ETS). EURO-CASE Policy Position Paper.

    The European Council of Academies of Applied Sciences, Technologies and Engineering (Euro-CASE) is an independent non-profit organization of national Academies of engineering, applied sciences and tec ...

    The European Council of Academies of Applied Sciences, Technologies and Engineering (Euro-CASE) is an independent non-profit organization of national Academies of engineering, applied sciences and technologies from 21 European countries. Its policy brief analyses different EU ETS reform options along the three criteria of environmental effectiveness, cost-effectiveness and political feasibility. It argues for a comprehensive reform of the EU ETS, consisting of (i) setting a price collar, (ii) expanding the sectoral scope of the EU ETS, (iii) introducing additional policy instruments for innovation, and (iv) addressing the problem of carbon leakage. The overall assessment of the options also addresses political feasibility.

    Virtual Library File
    Symposium 2015

    What’s needed to fix the EU’s carbon market. Recommendations for the Market Stability Reserve and future ETS reform proposals

    Carbon Market Watch is an initiative of several international NGOs that scrutinizes carbon markets and advocates for fair and effective climate protection. In its policy paper it proposes the followin ...

    Carbon Market Watch is an initiative of several international NGOs that scrutinizes carbon markets and advocates for fair and effective climate protection. In its policy paper it proposes the following six fixes to the EU’s carbon market:

    • Ensure that the EU ETS is designed to be in line with the 2050 objective of reduction emissions by 80-95% by increasing the linear factor by which the ETS cap is annually reduced to at least 2.6%
    • Protect the domestic nature of the 2030 GHG target by removing at least 1.6 billion of the excess allowances.
    • Avoiding carbon price hikes by enacting the Market Stability Reserve at the earliest possible date (2017).
    • Disallow the use of international offsets after 2020 as it delays domestic abatement efforts and has not proven to lead to real mitigation in host countries.
    • Introduce full auctioning for all industrial sectors post 2020 to reflect the polluter-pays-principle.
    • Establish an EU climate fond to be replenished by a portion of the ETS auctioning revenues