Revenue dimensions of the EU ETS Phase III

The report estimates that the currently proposed EU ETS Phase III structure would raise between €150-190bn under a 20% emissions reduction target, increasing to €200-310bn if the target is raised to 30%. Germany is projected to receive the highest proportion of these revenues. The authors argue that these funds should be prioritised for climate-related expenditures, such as carbon capture and storage (CCS) demonstrations, low-carbon RD&D, and energy efficiency improvements for vulnerable groups. The report also explores an alternative scenario where the cement and steel sectors are fully auctioned with border levelling; this would increase revenues by €18-22bn from cement and €14-17bn from steel under a 20% target. While some suggest using these funds for national debt reduction, the authors warn that this could damage the legitimacy of the EU ETS, though they acknowledge it as a potential short-term transitional option for severely indebted Member States.

• Under the currently proposed EU ETS Phase III structure, auctioning for the power sector and benchmarked free allocation for leakage-risk sectors would generate €150-190bn across the EU up to 2020 under a 20% target, rising to €200-310bn under a 30% target.
• Germany is expected to receive the largest share of auction revenues, estimated at €37-46bn under the 20% target, even after the redistribution of 12% of total auction revenue to poorer Member States and those exceeding Kyoto targets.
• A hypothetical alternative scenario involving full auctioning in the cement sector from 2013 would raise €20-25bn under a 20% target and €26-40bn under a 30% target.
• Full auctioning in the steel sector from 2013 would generate €13-25bn under a 20% target and €17-41bn under a 30% target.
• Border levelling measures for clinker and iron/steel imports could generate additional revenues estimated between €12-15bn in the 20% scenario and €17-27bn in the 30% scenario.
• The report identifies several priority climate-related uses for auction revenues: improving electricity efficiency for vulnerable groups, demonstrating CCS (potentially over €5bn via NER300), doubling low-carbon RD&D to meet the SET goal of €50bn, and strengthening EIB loans for renewables and grid infrastructure.
• International climate expenditures are a significant potential use of revenues, with the EU committed to €21bn in 'fast start' financing (2010-2012) and a collective global goal of €100bn annually by 2020.
• Using auction revenues for general debt reduction is considered controversial and potentially damaging to the EU ETS's purpose, although the revenues could cover 2% to 5% of the EU's overall 2009 debt levels depending on the scenario.

APA

Cooper, S., Grubb, M., Rysanek, A., & Laing, T. (2011). Revenue dimensions of the EU ETS Phase III. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/cs-revenues-phaseiii-final.pdf

Chicago

Cooper, Simone, Michael Grubb, Adam Rysanek, and Tim Laing. Revenue dimensions of the EU ETS Phase III. Climate Strategies, 2011. https://climatestrategies.org/wp-content/uploads/2014/11/cs-revenues-phaseiii-final.pdf.

Wikipedia

{{cite report |last1=Cooper |first1=Simone |last2=Grubb |first2=Michael |last3=Rysanek |first3=Adam |last4=Laing |first4=Tim |title=Revenue dimensions of the EU ETS Phase III |publisher=Climate Strategies |date=12 May 2011 |url=https://climatestrategies.org/wp-content/uploads/2014/11/cs-revenues-phaseiii-final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cooper2011revenue, author = {Cooper, Simone and Grubb, Michael and Rysanek, Adam and Laing, Tim}, title = {{Revenue dimensions of the EU ETS Phase III}}, institution = {Climate Strategies}, year = {2011}, month = may, url = {https://climatestrategies.org/wp-content/uploads/2014/11/cs-revenues-phaseiii-final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }