EU Emission Trading System


The EU ETS has been the cornerstone climate change policy in the European Union since 2005, and has gone through a number of reviews since. The EU institutions reached a preliminary compromise for the phase 4 revision on November. This revision, which will come into effect in 2021 aims to strenghten the ETS and solve some issues the policy has faced during the last phase. 


The EU ETS operates in 31 countries and covers 11.000 instalations, which account for about 45% of the European emissions. The ETS is designed to reduce covered emissions in a cost-effective way by providing a price signal for carbon to the market. Since its initiation in 2005, the system has gone through different phases. The next phase, ranging form 2021 to 2030, aims to reduce covered emissions by 43% compared to 2005.

ERCST has for a number of years been involved in initiatives and research on EU ETS, and its staff has over 10 years of experience on the topic.

In 2018, ERCST produced the '2018 State of the EU ETS report' together with a number of other European Think Tanks, which takes stock of the record of the EU ETS during the previous year. This report is part of a yearly series, which will continue in 2019.

Currently, ERCST is focusing its work on on the future of the EU ETS in the 'European Green Deal'.

Other topics include the (review of the) Market Stability Reserve (MSR) and the implementation of secondary legislation in light of the Phase 4 review, including the implementation of the funding mechanism, changes to free allocation rules and the revision of the State aid Guidelines

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Background paper: the EU ETS MSR: Coping with Covid-19 and preparing for the review
Date: 16 June 2020

Author(s): Andrei Marcu, Jean-Yves Caneill, Domien Vangenechten 

2020 State of the EU ETS Report
Date: 28 April 2020

Author(s): Andrei MarcuDomien Vangenechten, Emilie Alberola, Jahn Olsen, Jean-Yevs Caneill, Stefan P. Schleicher and Roman de Rafael

Feedback Paper - draft implementing regulation on the EU ETS Modernisation Fund
Date: 16 March 2020

Author(s):  Domien Vangenechten