The EU Emission Trading System (ETS) - Reform ahead

Details

The ETS covers around 45% of the EU’s greenhouse gas emissions and currently applies to more than 11,000 energy-using installations in the power generation and manufacturing industry. It’s been introduced in 2005 as an instrument to reduce the EU’s greenhouse gas emissions by 20 % till 2020 in a cost efficient and market-based way, by capping the EU’s overall GHG emissions and auctioning tradable ‘allowances’ to market players. To date, the ETS finds itself facing several challenges, i.a. in the form of a growing surplus of allowances. In the short term this surplus risks undermining the orderly functioning of the carbon market; in the longer term it could affect the ability of the EU ETS to meet more demanding emission reduction targets cost-effectively. Therefore, structural reform measures, such as the Market Stability Reserve or the inclusion of further sectors, e.g. transport into the scope of the ETS are being discussed. From an economic point of view it will be crucial that any reform aims to provide a stable framework that enables predictability for investments. The event brings together representatives from EU institutions as well as from industry and academia to discuss the envisaged ETS reforms.