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Symposium 2015

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

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 ...

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.

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.