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

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  • Torbjørg Jevnaker
  • Jørgen Wettestad

Abstract

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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    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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