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The briefing paper contends that carbon prices in Phase III of the EU ETS will likely fall in the lower end of the €20-40/tCO2 range, contradicting higher projections from the European Commission and other modelling studies. The author bases this on historical evidence showing that costs for environmental regulations—such as CFC phase-outs and sulphur dioxide trading—are consistently overestimated. The analysis highlights that current models often fail to account for the synergy between the EU's carbon cap and its other policy pillars, specifically the 20% energy efficiency target and renewable energy directives. Furthermore, the document notes that the 2007-2008 economic crisis, characterized by lower growth forecasts and higher fossil fuel prices, will further depress emissions and carbon prices. The author also points to the potential for a price collapse if the EU increases its acceptance of international credits from the Clean Development Mechanism (CDM).