Making the EU ETS future-proof: some tips for environment ministers

Carbon Market Watch asserts that the proposed 2.2% annual emission reductions in the EU ETS are inadequate to meet the 2°C or 1.5°C warming targets, potentially leading to 2 billion tonnes more CO2 than the EU's Paris pledge. The briefing highlights that carbon prices remain too low to drive decarbonisation and that free permit allocations have allowed heavy polluters to profit, with over 24 billion euros made between 2008 and 2014. To address these failures, the author recommends steeper emission cuts, phasing out free allowances, and ensuring the next trading period starts at actual emission levels.

• The proposed 2.2% annual emission reductions for the EU ETS are insufficient to meet the 2°C or 1.5°C global warming objectives. To reach the lowest end of the EU's 2050 objective (80% cuts), reductions must be 2.4% annually, and at least 2.8% annually to reach the higher end (95% cuts). Under current proposals, the EU would produce at least 2 billion tonnes more CO2 than its Paris climate pledge.
• The EU ETS fails the 'polluters pay' principle because carbon prices are too low to drive decarbonisation, and free permit allocations have allowed industries to profit. Heavy polluters earned over 24 billion euros from the system between 2008 and 2014, and further profits of over 19 billion euros are projected for the 2021-2030 period.
• Current EU ETS rules are expected to cause industrial emission cuts to stall over the next 15 years, according to the European Environment Agency, despite evidence that energy-intensive industries can reduce emissions while remaining competitive.
• To make the EU ETS future-proof, the document recommends several reforms: implementing steeper emission cuts, starting the next trading period at actual emission levels, preventing surplus permits from being given to new polluters, expiring 'hot air' allowances after 2020, phasing out free allowances by increasing the auctioning share from 57%, and removing free permits for industries not at risk of carbon leakage.

APA

De Jong, F. (2016). Making the EU ETS future-proof: some tips for environment ministers. Carbon Market Watch. https://carbonmarketwatch.org/2016/06/16/making-the-eu-ets-future-proof-some-tips-for-environment-ministers/

Chicago

De Jong, Femke. Making the EU ETS future-proof: some tips for environment ministers. Carbon Market Watch, 2016. https://carbonmarketwatch.org/2016/06/16/making-the-eu-ets-future-proof-some-tips-for-environment-ministers/.

Wikipedia

{{cite report |last1=De Jong |first1=Femke |title=Making the EU ETS future-proof: some tips for environment ministers |publisher=Carbon Market Watch |date=16 June 2016 |url=https://carbonmarketwatch.org/2016/06/16/making-the-eu-ets-future-proof-some-tips-for-environment-ministers/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dejong2016making, author = {De Jong, Femke}, title = {{Making the EU ETS future-proof: some tips for environment ministers}}, institution = {Carbon Market Watch}, year = {2016}, month = jun, url = {https://carbonmarketwatch.org/2016/06/16/making-the-eu-ets-future-proof-some-tips-for-environment-ministers/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }