Strengthening The EU ETS

The report argues that the EU ETS has failed to provide a sufficient carbon price signal for low-carbon investment due to a massive surplus of allowances caused by the recession and complementary energy policies. It proposes a triad of measures: setting aside allowances to recalibrate the market, implementing a rising reserve price on auctions to create a price floor, and accelerating negotiations for 2030 climate goals.

• The EU ETS is currently suffering from a significant surplus of emission allowances projected to last until 2020, which has caused allowance prices to collapse and undermined the system's ability to drive emission reductions or energy investment.
• The collapse in carbon prices has resulted in a substantial loss of expected public revenue from auctions, estimated at approximately €100bn up to 2020.
• The report argues that no single intervention is sufficient; instead, a combination of a set-aside of allowances, a rising reserve price on auctions, and accelerated post-2020 strategy negotiations is required to restore confidence and stability.
• Setting aside 1,400MtCO2 of allowances could potentially raise the carbon price toward €20/tCO2 and increase annual revenues across Europe to over €20bn/y.
• A Reserve Price for Auctions (RPA) would establish a de-facto floor price, reducing downside risk for investors and providing automatic insurance against future price collapses.
• The report notes that some Member States, such as the UK, have already implemented national carbon price floors to stabilize their own investment climates in the absence of a coordinated EU response.
• Long-term energy investments, which may total €1,000bn over the coming decade, require a clear policy framework and vision extending to 2030 to be viable.
• The EU ETS has contributed to emission reductions, estimated at an average of 30-70 MtCO2/y, primarily through fuel switching in the power sector and industrial process improvements in cement.

APA

Grubb, M. (2012). Strengthening The EU ETS. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2016/01/CS-StrengtheningTheEUETS-FullReport.pdf

Chicago

Grubb, Michael. Strengthening The EU ETS. Climate Strategies, 2012. https://climatestrategies.org/wp-content/uploads/2016/01/CS-StrengtheningTheEUETS-FullReport.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/2016/01/CS-StrengtheningTheEUETS-FullReport.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/2016/01/CS-StrengtheningTheEUETS-FullReport.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }