The new logic of the EU emissions trading system

Never before has such an important climate decision attracted so little attention. After six years of persistently low carbon prices a recent reform of the EU emissions trading system may put the scheme back on track. At the same time, complementary policies at the EU and national level suddenly matter, Lars Zetterberg argues in an article for ICTSD.

For years, the EU ETS has been plagued by an extensive allowance surplus and low allowance prices. With the reform it will be saved at the last minute and now it seems the EU ETS will be an instrument to count on and a good example on which to build. After more than two years of negotiations, in November 2017 the European Commission, the European Parliament and the European Council of Ministers agreed on how to reform the EU ETS. A reform that can push carbon prices above 25 euros as soon as 2023, thereby pushing out coal and increasing wind and solar power in Europe. At the same time, complementary policies at the EU and national level suddenly matter. Such a functioning EU ETS is not only important for Europe, but also for carbon pricing all over the world, climate policy expert Lars Zetterberg writes in this post for the International Centre for Trade and Sustainable Development.