On the EU Commission debate about the Emissions Trading System

07/13/2015 - On Wednesday, the European Commission will discuss the next period of the European Emissions Trading System (EU ETS).

On this issue, Ottmar Edenhofer, chief economist of the Potsdam Institute for Climate Impact Research:

"If we want to advance climate change mitigation, instead of readjusting the amount and distribution of free emissions allowances, a real reform of the EU Emissions Trading System (ETS) would make more sense. Of course too many emission allowances have been given away for free. Yet, to make a real difference, establishing a minimum price for emissions allowances could be a prime policy option. This would help stabilize investors' expectations and hence foster financing clean technology innovation and upscaling. Second, a minimum price would help governments to develop and implement their own, national climate and energy policies. The current ETS counters additional national efforts, for instance in Germany, because these efforts lead to a decrease of the emissions allowances price - and do not eventually decrease the overall emissions in Europe. If a minimum price would be introduced, the additional German efforts would result in an emissions reduction not just on the national but on the European level."