Strengthening the EU emissions trading scheme and raising climate ambition

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The study shows that in 2013 the ETS will have a surplus of 2 billion emission allowances, equal to the total emissions of all the annual installations covered by the EU’s carbon market. Without intervention, the effectiveness of the EU’s Emissions Trading Scheme would suffer from a lack of scarcity until 2024.

It shows that too rapid a reintroduction of any set-aside allowances (before 2020) risks a zero effect on the CO2 price. Only reintroduction of the allowances after at least a decade, or full cancellation, combined with deeper year-on-year emission cuts in the EU ETS would properly address the current failures, restore CO2 prices and deliver on adequate overall emission cuts by 2020 and 2050. The study shows that a long term set aside combined with year-on-year reduction factor of 2.6 percent would lift the price for one tonne of CO2 by up to 17 Euro in 2020. A long-term set aside with year-on-year reduction of 3.9 percent would lift the CO2 price by more than 20 Euro by 2020.