Evaluation of policy options to reform the EU Emissions Trading System
Evaluation of policy options to reform the EU Emissions Trading System : Effects on carbon price, emissions and the economy / Martijn Verdonk, Corjan Brink, Herman Vollebergh and Mark Roelfsema. PBL Netherlands Environmental Assessment Agency, April 2013, 72 p.
The EU Emissions Trading System (EU ETS) is a key instrument of EU climate policy, providing a clear reduction pathway for CO2 emissions. Increasingly, doubts are being raised about whether the EU ETS provides a proper price signal for investment in lowcarbon technologies that contribute to the long-term EU target for a low-carbon society by 2050; in particular, because of the much lower than expected carbon price and its volatility. This price is likely to remain low for a long time and this fuels doubts about whether the ETS will remain a key policy instrument in the long term. Such doubts also increase investment uncertainty, which is likely to have a negative impact on further investments in low-carbon technologies. The current situation on the ETS market illustrates the weakness of the EU ETS design, as it is not flexible enough to adapt to unforeseen turns of events, such as an economic crisis…