Publications

The ETS: a residual market for carbon abatement in need of a structural reform

18 March 2012 - Carbon Trends - By : Fabien ROQUES

The EU ETS has moved from centerstage to the backseat of European decarbonization policy. Reform is needed in order to provide clarity on the long term emission reduction objectives (for phase 4 beyond 2020), but most importantly, to introduce some form of allowance supply management and thereby reduce the risk of future policy intervention.
Following the deterioration of the European macroeconomic outlook in the summer 2011, carbon prices have declined to levels below 10 €/tCO2. This initiated a political debate on whether the ETS should be reformed to bring carbon prices back into a higher range that would be more supportive of the European decarbonization agenda.
Let us first put things straight. The ETS market is working well and the current low carbon price simply reveals that the weak economic outlook and recent energy market developments have reduced the cost of complying with the predefined emission caps. If policy makers want to see a higher carbon price, they should commit to a more stringent cap for phase 4. But some argue that this would not be sufficient, given the lack of credibility of long term policy engagements and the short time horizon of many market participants. Hence the idea of an immediate tightening of the market through a set aside of allowances in phase 3 as part of the ongoing discussions on a new Energy Efficiency Directive.

The ETS: a residual market for carbon abatement in need of a structural reform Download
To learn more
  • 04/25/2024
    I4CE’s recommendations to the european banking authority on prudential transition plans

    The European Banking Authority (EBA) is clarifying how the banks should frame their “transition plan” as required by the EU prudential regulation. The transition plan is the bank’s strategic roadmap to prepare for the transition to a sustainable economy as framed by the jurisdictions they operate in, including an EU climate-neutral economy. It has been introduced in several EU regulatory frameworks, including as a disclosure requirement arising from the CSRD. The prudential framework and the EBA are focusing on a specific angle: how the banks plan to manage their financial risks related to the transition. EBA’s framing of these plans will be key to determine whether the banks will manage their financial risks consistently with the broader need of financing the transition to a low-carbon economy. 

  • 04/19/2024 Foreword of the week
    World bank and IMF Spring Meetings: How can the reformed institutions play a leading role in funding the transition?

    Rethinking how development can be financed to take into account the rising challenges of our time is a fastidious task, especially when thousands of experts, decision makers and practitioners want to leave their print. The outline of the new international financial architecture is being debated again this week, with more questions open for discussion than consensus on the answers. 

  • 04/19/2024 Blog post
    More and better finance: maximising positive climate impacts for a timely transition 

    Since the Paris Agreement in 2015, significant strides have been made to foster the commitment of countries and financial institutions to address the climate crisis and ensure that climate risks and opportunities are considered in investments. However, with emissions required to peak before 2025, our window of opportunity is rapidly closing to keep +1.5°C within reach. Financial needs to lower greenhouse gas (GHG) emissions and to address adaptation priorities are increasing rapidly in the meantime. Luis Zamarioli Santos and Diana Cárdenas Monar, from I4CE, believe that commitment must urgently translate into action, and action must bring the urgent change the world needs. Both governments and public financial institutions have a central role to play to deliver more and better finance, maximising positive impacts. This blogpost highlights some opportunities to advance in the path for a systemic transformation, involving key stakeholders with a whole-economy approach.  

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer