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Ratcheting Up Carbon Trade: The Politics of Reforming EU Emissions Trading


  • Torbjørg Jevnaker
  • Jørgen Wettestad


The EU’s emissions trading system (ETS) covers almost half of its greenhouse gas emissions and has been hailed as the cornerstone and flagship of EU climate policy. In spring 2013, however, the ETS was in severe crisis, with a huge surplus of allowances and a sagging carbon price. Even a formally simple measure to change the timing of auctioning was initially rejected by the European Parliament. Two years later, a much more important, quantity-focused “market thermostat” (the market stability reserve) was adopted, and proposals for a complete ETS overhaul were put on the table. This article examines how it was possible to turn the flagship around so quickly, providing insights into the mechanisms for gradually rendering emissions trading systems more effective. Crucial changes at the EU and national levels are identified, chief among them changes in Germany and in the European Parliament. Furthermore, the quantity-based tightening mechanism discussed could be of relevance for carbon markets outside Europe.

Suggested Citation

  • Torbjørg Jevnaker & Jørgen Wettestad, 2017. "Ratcheting Up Carbon Trade: The Politics of Reforming EU Emissions Trading," Global Environmental Politics, MIT Press, vol. 17(2), pages 105-124, May.
  • Handle: RePEc:tpr:glenvp:v:17:y:2017:i:2:p:105-124

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    References listed on IDEAS

    1. Andrew Moravcsik, 1993. "Preferences and Power in the European Community: A Liberal Intergovernmentalist Approach," Journal of Common Market Studies, Wiley Blackwell, vol. 31(4), pages 473-524, December.
    2. A. Denny Ellerman & Claudio Marcantonini & Aleksandar Zaklan, 2016. "The European Union Emissions Trading System: Ten Years and Counting," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 89-107.
    3. Christopher J. Bickerton & Dermot Hodson & Uwe Puetter, 2015. "The New Intergovernmentalism: European Integration in the Post-Maastricht Era," Journal of Common Market Studies, Wiley Blackwell, vol. 53(4), pages 703-722, July.
    4. Richard G. Newell & William A. Pizer & Daniel Raimi, 2013. "Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 123-146, Winter.
    5. Sebenius, James K., 1983. "Negotiation arithmetic: adding and subtracting issues and parties," International Organization, Cambridge University Press, vol. 37(02), pages 281-316, March.
    6. Jonas Meckling, 2015. "Oppose, Support, or Hedge? Distributional Effects, Regulatory Pressure, and Business Strategy in Environmental Politics," Global Environmental Politics, MIT Press, vol. 15(2), pages 19-37, May.
    7. Jørgen Wettestad, 2014. "Rescuing EU Emissions Trading: Mission Impossible?," Global Environmental Politics, MIT Press, vol. 14(2), pages 64-81, May.
    8. Jon Birger Skjærseth & Jørgen Wettestad, 2010. "Fixing the EU Emissions Trading System? Understanding the Post-2012 Changes," Global Environmental Politics, MIT Press, vol. 10(4), pages 101-123, November.
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