Set-aside of European CO2 emission allowances considered as a signal for further ETS reform

27-11-2012 | News item

A set-aside of CO2 allowances would reduce the current oversupply in the European Emissions Trading System. This would result in temporary higher CO2 prices. However, a literature study has shown that the impact of the European Commission’s proposal on CO2 prices is likely to be limited.

Although the total amount of allowances up to 2020 would remain unchanged, the proposal sends out a signal to investors that the functioning of the ETS is a priority for politicians, and increases the likelihood of further reforms. Any negative impact of back loading on ETS companies in the Netherlands is likely to be limited.