Strengthening The EU ETS

The report argues that the EU ETS has failed as a driver for investment due to a surplus of emission allowances and collapsed prices, which are currently below €10/tCO2. To address this, the author proposes a three-part strategy: the set-aside of allowances to recalibrate the system, the implementation of a rising reserve price on auctions to create a price floor, and accelerated negotiations for post-2020 strategies. The document emphasizes that no single measure is sufficient to restore the strategic context needed for the estimated €1,000bn in energy system investments required over the coming decade.

• The EU ETS is currently failing to drive emission reductions or energy investment because a surplus of emission allowances, projected to last beyond 2020, has caused prices to collapse to levels well below €10/tCO2.
• Europe requires significant energy system investment, estimated at up to €1,000bn over the next decade, but the current dichotomy between low market carbon prices and high projected prices (€25 to €40/tCO2) increases the risks and costs for these investments.
• Setting aside 1,400MtCO2 of emission allowances could 'recalibrate' the system and potentially raise prices toward €20/tCO2, which would increase annual revenues to over €20bn across Europe, including approximately €1bn/y in Greece and €2bn/y in Spain and Italy.
• A Reserve Price for Auctions (RPA) is recommended to establish a de-facto floor price, reducing downside risk for low-carbon investors and providing a more stable alternative to repeated manual interventions.
• The author warns that a lack of EU-level action may lead Member States to implement national carbon floor prices, as the UK has already done, which could create competitiveness issues and fragment the single market.
• Long-term energy infrastructure investment requires a strategic framework and negotiations for 2030 commitments, but these processes cannot be used as a tool to fix current short-term market prices.

APA

Grubb, M. (2012). Strengthening The EU ETS. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/cs-strengtheningtheeuets-executivesummary.pdf

Chicago

Grubb, Michael. Strengthening The EU ETS. Climate Strategies, 2012. https://climatestrategies.org/wp-content/uploads/2014/11/cs-strengtheningtheeuets-executivesummary.pdf.

Wikipedia

{{cite report |last1=Grubb |first1=Michael |title=Strengthening The EU ETS |publisher=Climate Strategies |date=2012 |url=https://climatestrategies.org/wp-content/uploads/2014/11/cs-strengtheningtheeuets-executivesummary.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{grubb2012strengthening, author = {Grubb, Michael}, title = {{Strengthening The EU ETS}}, institution = {Climate Strategies}, year = {2012}, url = {https://climatestrategies.org/wp-content/uploads/2014/11/cs-strengtheningtheeuets-executivesummary.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }