Carbon Trading – Hot Air or an Effective Tool to Reduce Greenhouse Gas Emissions

A heated debate is currently putting the European Union Emissions Trading Scheme - EU ETS - on the defense line. Is it accomplishing its mission or is it failing terribly in achieving its goal to reduce industrial greenhouse gas emissions cost-effectively and to fulfil the EU’s climate commitments under the Kyoto Protocol.

The EU ETS is a system based on the "cap and trade" principle. Based on this concept, it has put a price on carbon emissions and shown that it is possible to trade greenhouse gas emissions. Emissions from installations within the scheme are falling as intended. However, a surplus of emissions or a lack of scarcity in the marketplace has resulted in price depreciation with numerous consequences mainly on the long-term investment incentives of large power generators and users. The scheme has reached a critical make or break point.

Will the EU ETS survive its current crisis? Is market intervention necessary for the higher climate goal? Will it continue to inspire other countries and regions to launch cap and trade schemes of their own? Will the promise of being the nucleus and backbone of a global carbon market materialize?

Katja Mayer will elaborate on these sensitive questions and provide an outlook on the EU ETS from a market perspective. Katja is an expert for emission trading mechanisms under the Kyoto protocol and the EU ETS and closely follows regulatory developments in the international carbon market. She is Consultant to Deutsche Börse Group and Member of the Supervisory Board of EEX- European Energy Exchange.