Publications
Improving the EU emissions trading scheme
| Author: | Mark Bell |
| Date of Publication: | August 2008 |
The European Union’s Emissions Trading Scheme is the centrepiece of the EU’s efforts to reduce its greenhouse gas emissions. Successive British prime ministers and other European leaders have staked much political capital on its success.
Given that a global carbon market is likely to be a critical tool in tackling climate change, the significance of the successes and failings of the ETS go well beyond the borders of the EU.
This briefing note examines the
potential to improve the ETS. It
reviews its institutional architecture
and design, its possible extension to currently exempted sectors of the
European economy, and the potential
for integration with other emerging
carbon markets.
The report also recommends that:
- The EU should move more aggressively towards auctioning emissions allowances rather than allocating them to member states.
- The EU should not place restrictions on the use of auction revenues by member states.
- The ETS be expanded into other areas of the economy with caution: aviation and shipping should be included in the ETS, but road transport and agriculture should be left outside for the time being.
- Integration with a US or Australian ‘cap and trade’ system be pursued only when it is clear that doing so will not lead to major price volatility within the EU ETS.
View the press release