News 2017-03-08

How can emissions trading become a more effective climate policy tool?

What is needed to make emissions trading work? How can the system become more proactive when it comes to climate adaptation? Researchers from IVL Swedish Environmental Research Institute, the University of Gothenburg, and the American organization Resources for the Future are setting out to investigate just that, with support provided by the Swedish Energy Agency.

Emissions trading is a cornerstone of EU climate policy. At the same time, the scheme has been criticized for being toothless and not leading to a reduction of emissions, partly because the price of emission allowances has been so low. The reason for this is a large surplus of emission rights.

– The system has not worked as intended. Other instruments, such as the energy efficiency and renewable directives, have together with the economic recession contributed to a lowering of the emission allowance price, creating a surplus and weakening the impact of the instrument, says Lars Zetterberg, researcher at IVL Swedish Environmental Research Institute.

Nonetheless, Lars Zetterberg believes that the emissions trading system enjoys a wide support from industry and government, and if we cannot get this system to drive climate adaptation it will be replaced by something else.

– We want to focus on existing support for the system and build on it. There is broad agreement that pricing carbon will be the most efficient way to achieve emissions reduction in the future, he says.

Researchers will study how emissions trading can be strengthened and made to work together with other instruments, so that when it comes to climate adaptation they will work together rather than interfere with each other. Among other things, they will evaluate climate policy instruments currently available in Europe and North America, where price-setting and non price-setting instruments coexist. They will also assess the impact of introducing a price floor and cap for the EU emissions trading scheme EU-ETS.

– One aspect of the task at hand is to examine how national climate policy frameworks can be coordinated, so that they will enable us to arrive at a global carbon price, says Lars Zetterberg.

The project was launched in December 2016 and will run over two years. The results are intended to guide policy makers in formulating EU climate policy.

For more information, please contact:
Lars Zetterberg, lars.zetterberg@ivl.se, +46 (0)10-788 65 57