After seven years of failure, the European Union’s claims that it can ‘fix’ its collapsing Emissions Trading Scheme (ETS) no longer have any credibility.
The EU ETS, the EU’s flagship policy to address climate change, was introduced in 2005 and gave rise to the currently largest carbon market worldwide. The ETS includes ‘cap and trade’ and ‘offsets’ systems which allow participants to buy and sell emissions permits and offset credits in order to comply with their reduction targets or simply to make a profit on the market.
The idea is to reduce industrial greenhouse gas emissions cost-effectively by creating incentives for climate-friendly innovations and so move industry onto a low-carbon path.
But the scheme has failed to do so.