Carbon Pricing Project - CPI

This executive summary outlines a joint study by the Climate Policy Initiative (CPI) and Climate Strategies regarding the effectiveness of the EU ETS in driving low-carbon investment. It identifies that while the EU ETS provides a foundation for investment, its impact is hindered by the Clean Development Mechanism (CDM), current International Financial Reporting Standards (IFRS), and short corporate payback expectations, suggesting a need for increased stringency and complementary policies.

• The EU ETS helps drive low-carbon investment, but its effectiveness is limited by several factors. Specifically, the Clean Development Mechanism (CDM) allows European installations to exceed the ETS cap by up to 1.5 billion tonnes of CO2 over ten years, which reduces low-carbon investment opportunities and creates uncertainty. Additionally, current International Financial Reporting Standards (IFRS) fail to provide a 'true and fair view' of carbon costs because emissions covered by free allowances are not reported.
• Corporate investment in low-carbon innovation is influenced by expectations of future policy stringency and the availability of complementary policies. Interviews with 800 manufacturing companies show that those expecting higher future stringency in permit allocation are more likely to invest in low-carbon innovation. Furthermore, surveyed companies typically require energy efficiency investments to have a payback period of less than four years, indicating a need for policies that extend the investment horizon. Power technology companies specifically identify feed-in tariffs as the most critical factor for R&D and sales investments.

APA

Climate Policy Initiative (2011). Carbon Pricing Project - CPI. https://www.climatepolicyinitiative.org/publication/344/

Chicago

Climate Policy Initiative. Carbon Pricing Project - CPI. 2011. https://www.climatepolicyinitiative.org/publication/344/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Carbon Pricing Project - CPI |date=13 January 2011 |url=https://www.climatepolicyinitiative.org/publication/344/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2011carbon, author = {{Climate Policy Initiative}}, title = {{Carbon Pricing Project - CPI}}, institution = {Climate Policy Initiative}, year = {2011}, month = jan, url = {https://www.climatepolicyinitiative.org/publication/344/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }