The EU Emissions Trading Scheme: putting the soft in soft power

Energy & Commodities
  • In the last two weeks the European Commission has proposed further tightening for the EU’s flagship Emissions Trading Scheme (EU ETS) to try to raise European carbon prices. At the same time, it announced that it would suspend for a year its plan to extend the scheme to include foreign airlines. Both are important evolutions in the EU ETS story.
  • These developments obviously tell us about the problems that have beset the EU ETS – both as a market mechanism and as a climate change policy export. But they will also provide some insight into the state of the domestic politics that ultimately props up – or does not prop up – the EU’s appetite for global leadership on climate change.
  • Europe’s global climate change ambitions rely on its shaky ability to sustain its commitments domestically. But that domestic commitment will also reflect the coalition that it is able to build internationally through its own leadership. As the EU ETS debate suggests, that feedback loop for European climate change policy is now probably driving against ambition rather than for it.
  • Will EU industry and EU politicians continue to back aggressive domestic policy on climate change when EU action can barely budge the global dial? It may not be spoken explicitly yet, but this is the question that hangs over European climate change policy.

Download this Insight here.


The views expressed in this note can be attributed to the named author(s) only.