The EU Emissions Trading System (ETS) is the principal EU policy for reducing Europe’s carbon emissions and the highest profile international mechanism for cutting carbon. Other countries, including China, are considering their own cap-and-trade systems and hoping to learn from the European system, which aims to deliver the cheapest path to decarbonisation.
But the ETS has been widely criticised. Critics argue that it fails to provide an effective incentive to new technologies, in particular renewables. Others say that it has delivered windfall profits to major carbon producers, while delivering limited carbon reductions. Others claim it has simply pushed heavy industry outside the EU.
This debate will consider these arguments, within the context of ongoing discussion about the future of the ETS at EU level.
In particular, the event will consider the following questions:
- How successful has the ETS been in delivering carbon reductions?
- Should policymakers be worried about the low permit price the ETS has delivered? To what extent is this a result of ETS design flaws, the economic downturn or the impact of subsidised investments outside the ETS?
- What measures should be taken to improve the ETS? Should the EU increase the 2020 carbon target and withdraw permits from the system? Is the answer to set a longer term carbon cap, with effective banking and borrowing, to provide a direct signal for long-term investments? Should we introduce an EU floor price or carbon tax or should we give up on the ETS, and rely on technology specific deployment subsidies? What risks would such approaches raise?
- How should the ETS sit alongside other policy measures to support the development of new technologies, without undermining the potential of the market to deliver the cheapest possible emissions reduction?
- What is getting in the way of improvements to the ETS?
Chair | Guy Newey | Head of Environment & Energy | Policy Exchange
Baroness Bryony Worthington | Founder | Sandbag
Professor Michael Grubb | Cambridge University and Ofgem
Krzysztof Bolesta | Principal Advisor to Minister of Environment of the Republic of Poland
Etienne Amic | Managing Director | Commodities at JPMorgan