Slaying the Dragon: Vanquish the surplus and rescue the ETS

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In our 6th annual report, Slaying the Dragon, we highlight the effect of recent changes to the ETS rules. There have been big improvements from an environmental perspective – including harmonised cap setting, the introduction of carbon-efficiency benchmarks and the banning of certain classes of offsets.
Our report finds that changes introduced to date, though welcome, are not sufficient to address the ETS’s significant problems, the most obvious of which is the build up of a massive excess of allowances that is suppressing prices and dissuading companies from investing in clean technology.
With a new team in Brussels there is great potential to get the ETS back on track. Vanquishing the surplus should be the first item on the to-do-list, but positively addressing competitiveness fears, by ensuring ETS rules stimulate green growth in Europe, must also be a part of that process.