TheCompensators* » Think Tank has ambitious plans to reform ETS

Think Tank has ambitious plans to reform ETS

According to, internal documents of the think tank Mercator Research Institute on Global Commons and Climate Change (MCC), reveal ambitious plans to reform the ETS. Remarkably, MCC is headed by Ottmar Edenhofer who – as co-chair of working group III Mitigation of Climate Change at the Intergovernmental Panel on Climate Change (IPCC) – is one of the world’s most reputable climate researchers.

The calculations for the proposal show that a higher price for ETS CO2 emission rights would generate significant income for countries’ budgets. In turn, this could especially help southern European countries to overcome their public debt crisis. The MCC proposal has three main pillars according to

  • A minimum price for each certificate of 20EUR
  • Inclusion of transport and buildings in the ETS
  • Drastic reduction of free-of-charge distribution of certificates

TheCompensators* welcome the proposal as an important contribution to the debate on effective EU climate policy. It give a great example how ambitious climate policy can be when combined with economic action.

While critically points out that consumer prices would rise due to such a high emission rights price, TheCompensators* would like to bring foward the following two arguments:

  • The neediest/poorest consumers can be sheltered from rising prices by targeted financial support instead of ignoring internalization of the cost of climate change for polluting technologies and industries. This is a standard mechanism proposed and successfully applied in developing countries that phase out subsidies on petrol or gas. From a general point of view, low CO2 prices are nothing but fossil fuel subsidies.
  • Under high CO2 prices, climate-friendly technology would develop rapidly and lower the cost for the consumers again. In addition, the resulting leadership in low carbon technologies would create additional employment  in Europe.

TheCompensators* will keep accompanying the discussion and promoting the ETS as the most advanced economic tool we have to tackle climate change. You can contribute to effective climate action and reinforce our message by donating here.


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