Download publication

Policy Brief

You’d better bet on the ETS

The issue: The European Union's emissions trading system (ETS), introduced in 2005, is the centerpiece of EU decarbonisation efforts and the biggest emissions trading scheme in the world. After a peak in May 2008, the price of ETS carbon allowances started to collapse, and industry, civil society and policymakers began to think about how to ‘repair the ETS’.

By: Date: April 8, 2013

The issue: The European Union’s emissions trading system (ETS), introduced in 2005, is the centerpiece of EU decarbonisation efforts and the biggest emissions trading scheme in the world. After a peak in May 2008, the price of ETS carbon allowances started to collapse, and industry, civil society and policymakers began to think about how to ‘repair the ETS’. However, the ETS is an effective and efficient tool to mitigate greenhouse gas emissions, and although prices have not been stable, it has evolved to cover more sectors and greenhouse gases, and to become more robust and less distorting. Prices are depressed because of an interplay of fundamental factors and a lack of confidence in the system.

Policy challenge

The ETS must be stabilised by reinforcing the credibility of the system so that the use of existing low-carbon alternatives (for example burning gas instead of coal) is incentivised and investment in low-carbon assets is ensured. Further-more, failure to reinvigorate the ETS might compromise the cost-effective synchronisation of European decarbonisation efforts across sectors and countries. To restore credibility and to ensure long-term commitment to the ETS, the European Investment Bank should auction guarantees on the future emission allowance price.This will reduce the risk for low-carbon investments and enable stabilisation of the ETS until a compromise is found on structural measures to reinforce it in order to achieve the EU’s long-term decarbonisation targets.

Download Publication

You'd better bet on the ETS

Policy Brief

You’d better bet on the ETS

16m read (8 pages)

Download publication

Topics

Tags

Comments

Read about event More on this topic

Upcoming Event

10 
Sep
2015
12:30

Making low-carbon technology support smarter

Combatting climate change on the global level will be much easier when abundant low-carbon technologies that are competitive in their cost and capabilities become available. But how can we encourage private companies to invest in low-carbon innovation?

Speakers: Georg Zachmann Topic: Energy & Climate
Read article Download PDF More on this topic More by this author

Policy Brief

Making low-carbon technology support smarter

This Policy Brief describes the interaction between three approaches that are effective in driving innovation in low-carbon technologies. Based on that, the author provides four recommendations for making low-carbon technology support smarter.

By: Georg Zachmann Topic: Energy & Climate Date: August 18, 2015
Read article More on this topic More by this author

Blog Post

Georg Zachmann

European political preferences for decarbonisation

On 8 July the European Parliament  finally voted to introduce a mechanism to stabilise the European emissions trading system (ETS). What can a detailed analysis of the voting results tell us about European enthusiasm for ETS?

By: Georg Zachmann Topic: Energy & Climate Date: July 13, 2015
Read about event More on this topic

Past Event

Past Event

Mobilizing capital towards a low-carbon economy

Energy & Climate

Topic: Innovation & Competition Policy Date: April 27, 2015
Read about event More on this topic

Past Event

Past Event

The implications of decarbonisation for business and the financial sector

Energy & Climate

Topic: Energy & Climate Date: April 27, 2015
Read article Download PDF More by this author

Policy Brief

Elements of Europe's energy union

Elements of Europe's energy union

To meet the EU's objectives for emissions, electricity supply and gas security of supply, well-designed European markets could provide better results at lower cost than uncoordinated national approaches. In other areas – such as energy efficiency and supporting innovation – markets alone might not be enough. Europe should thus rethink its quantitative headline targets for 2030.

By: Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: September 9, 2014
Read article More on this topic More by this author

Video

Video

How to make renewables cheaper

After publishing "When and how to support renewables," Georg Zachmann talks to Sandra Gathmann about why renewable energies still matter and how the cost can be brought down.

By: Georg Zachmann Topic: Energy & Climate Date: March 14, 2014
Read article More by this author

Blog Post

Georg Zachmann

Investment and growth in the time of climate change

Climate policy, like all polices, is about making choices. Taking an economic perspective, the report addresses two major choices of European decarbonisation policies. At the highest level, a decision has to be made whether climate change is best dealt with by reducing carbon emissions into the atmosphere (mitigation), or by investing into assets that allow people to better cope with the consequences of global warming (adaptation). Then, the individual policies to curb emissions and incentivize adaptation

By: Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: March 12, 2014
Read article More on this topic More by this author

Blog Post

Georg Zachmann

What should Europe do about high energy prices?

Though Europe might have to live with higher energy prices than the US, it does not face a trade-off between remaining competitive and becoming sustainable.

By: Georg Zachmann Topic: Energy & Climate Date: March 12, 2014
Read article More on this topic

Blog Post

Georg Zachmann
Michele Peruzzi

Does Europe need a renewables target?

The discussion on whether the EU needs a new renewables target beyond 2020 is gaining traction. The proponents argue that a target for 2030 would give the visibility needed for long-term investments all along the value chain (e.g. into network and storage infrastructure). That is, without a firm political timetable for the roll-out of renewables, the cost of deployment might be much higher.

By: Georg Zachmann and Michele Peruzzi Topic: Energy & Climate Date: February 13, 2014
Read article More by this author

Video

Video

Restoring faith in the ETS

Following a vote by the European Parliament to boost the price of allowances on the EU’s carbon market, Georg Zachmann analyses the debate surrounding the Emmission Trading System (ETS) as a whole. Zachmann believes that "backloading," or witholding the allowances to fight their falling price, is part of a politically charged debate with little economic […]

By: Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: June 19, 2013
Read article More by this author

Blog Post

Georg Zachmann

Backloading – An ineffective economic measure for a good political reason?

Wednesday afternoon will see the fourth vote in the European Parliament (this time again in the environment committee) on a scheme to temporarily reduce the number of allowances available to participants in the EU emissions trading system in order to stabilise dwindling allowance prices. 

By: Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: June 19, 2013
Load more posts