Change Options for the EU Emissions Trading System (Report)
In the EU operators of fixed installations and aviation companies may emit greenhouse gas emissions only if they possess the corresponding emission allowances. According to the Commission, the reduction of prices for emission allowances is a result of the “imbalance between supply and demand”. Now, it proposes options for eliminating structurally and sustainably what it perceives as a "supply-demand imbalance“ in the EU emissions trading system (EU ETS).
A drop in allowance prices does not justify any structural changes in the ETS, as this drop is not caused by a dysfunction in the market. Raising the carbon reduction target to 30% without an international agreement does not ensure any benefits in terms of climate policy, since it simply leads to carbon leakage. Statutory price and market regulations undermine the market-based character of ETS and therefore should be categorically rejected. The inclusion of further carbon emitting sectors in the ETS fosters its efficiency enhancing effect.