Options for structural measures to improve the European Union Emissions Trading System: response to a European Commission consultation

Main points

  • The impact of ‘back-loading’, a short-term measure, will be limited.
  • ‘Back-loading’ is unlikely to have a significant impact on the price of emissions allowances, unless the ‘back-loaded’ allowances are permanently removed from the system at some point before 2020.
  • It is important that long-term structural reforms incorporate the required flexibility.
  • Because a price management mechanism is difficult to reconcile with the fundamental principles of an Emissions Trading System, a rule-based reserve management mechanism may be the appropriate option.

Luca Taschini