The Emissions Trading System (ETS) has returned as the cornerstone of the bloc’s climate policy. As part of its Fit for 55 climate policy package, Brussels is betting that a major overhaul of the cap-and-trade scheme will speed up emissions reductions, incentivize companies to invest in clean technologies and help the bloc achieve its climate targets. But the current proposal hasn’t sparked enthusiasm.
On efforts to strengthen the ETS, some countries are concerned the current proposal could lead to a carbon price jump on top of steep rises this year. In addition, some member states are concerned about the possible extension of ETS to transport and buildings, claiming that it could increase energy poverty and other disparities.
Questions to be addressed include:
- What does the planned ETS reform mean for Europe and its climate goals?
- Which challenges and opportunities does it present for industry?
- How can a carbon price contribute to reducing emissions? Is the EU’s system fit for purpose?
- What political and social risks does expanding the ETS to heating and transport fuels bring? Is it possible to design a carbon price that’s socially fair? Are there any alternatives?
- Is there a danger that disagreements over ETS reform will hold up progress on the entire Fit for 55 package?