The European Energy Review has published an interesting article on the European Carbon Emissions Trading Scheme ETS. It points out that while virtually all stakeholders agree that the ETS needs a fix, there are many different perspectives on what that fix should be.
TheCompensators*think that an immediate set-aside of carbon emission allowances is necessary to take overallocation out of the market. This would then give the time to design a longterm mechanism which relates the number of allowances to the success of e.g. renewable energy policies. This mechanism should then automatically and predictably reduce emission allowances in the market depending on renewable energy technologies installed as well as other factors.
Thus, it would then be guaranteed that installing solar panels or wind turbines will reduce carbon emissions and rather than providing free emission allowances for dirty technologies such as lignite and coal.
As always, let us remind you that you can already help reduce emissions in the market by buying and deleting EUAs with TheCompensators*.