The EU ETS in the European Climate Policy Mix : Past, Present and Future

Emissions trading is arguably the lynchpin of EU (European Union) climate policy. In January 2005 the EU adopted a cap-and-trade emissions trading system, through which a certain emission cap was set and a fixed number of emission allowances distributed amongst installations in the various Member States. Although the system has encountered some problems, the EU has not lost faith in it. In fact, even more now depends on its performance – not least the EU’s credibility in international climate politics – than when it was first adopted. The system is undeniably innovative. Prior to 2005, only a few countries had experimented with emissions trading, and no one had ever attempted to employ it at a supranational level. Against this background, this report seeks to analyse and assess the functioning of the EU ETS from a political and legal perspective, and to explore how capable the scheme is to deal with future challenges. To this end, the report examines the past, present and future of emissions trading in the EU