Trust in the single market? The case of the EU Emissions Trading

 EUI LIFE SIDE Follow-up Project, FSR Climate and European Association of Environmental and Resource Economists (EAERE) – Sala Europa, Villa Schifanoia

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Carbon pricing is widely regarded as a key instrument to achieve the emission reduction targets set by the Paris Agreement. Since the introduction of the European Emission Trading System (EU ETS) in 2005, carbon pricing has grown extensively around the world. The EU ETS is the result of a complex legislative process involving the governments of 31 participating countries, thus providing one of the most interesting examples of democratic participation of EU countries in the design of an EU crucial policy and in the creation of a single market within it. Carbon pricing is widely regarded as a key instrument to achieve the emission reduction targets set by the Paris Agreement. Since the introduction of the European Emission Trading System (EU ETS) in 2005, carbon pricing has grown extensively around the world. The EU ETS is the result of a complex legislative process involving the governments of 31 participating countries, thus providing one of the most interesting examples of democratic participation of EU countries in the design of an EU crucial policy and in the creation of a single market within it. Since its adoption, the EU ETS has faced a number of challenges, including a substantial price fall with allowance prices getting below 5€/ton of CO2 during the economic recession. This has urged European institutions to implement a series of revisions of the system. As a result, after years of low carbon prices, in which trust in the EU ETS was low, the price of the European allowances has risen remarkably following the announcement of the reform of the EU ETS for Phase IV (2021-2030), which was passed in 2018. This confirms the crucial role that expectations can play in anticipating the policy when this is perceived as sufficiently stringent, credible and long-run.

The following questions will be addressed by the event:

  • What is the current level of trust by participants and the public opinion in the EU ETS?
  • What can be done to further support the credibility of the system and enhance trust in the single market in the context of climate policy?
  • How can transparency and MRV (Measurement, reporting and verification) contribute to build trust in climate policy measures in general, and in the EU ETS in particular?
  • How can we trigger mutual trust across countries and facilitate the ongoing negotiations on CORSIA and on Article 6 in the Paris Agreement?
  • How can scholars and research better bridge with Policy Makers to enhance trust in Climate Policy measures?

Speakers:
Carlo Carraro, Professor (University of Venice), President of the European Association of Environmental and Resource Economists (EAERE) and Director of the International Centre for Climate Governance
Ottmar Edenhofer, Director and Chief Economist, Potsdam Institute for Climate Impact Research, Director of the Mercator Research Institute on Global Commons and Climate Change, Professor, Technische Universität Berlin
Hermann Vollebergh, Professor of Economics and Environmental Policy, Tilburg University, and Senior Research Fellow, PBL Netherlands Environmental Assessment Agency
Martin Weitzman, Professor of Economics, Harvard University Center for the Environment

Roundtable panellists:
Dominique Bureau, General Delegate of the Economic Council for Sustainable Development, Ministry of Ecology, Sustainable Development and Energy, France
Ben Groom, Grantham Research Institute on Climate Change and the Environment, London School of Economics, London, UK
Xavier Labandeira, Director of Economics for Energy, Spain, and Department of Applied Economics, University of Vigo, Spain
Aldo Ravazzi, Chair OECD-WPEP (Working Party on Environmental Performance), President Green Budget Europe, and Chief Economist, DG Sustainable Development, EU&Global Affairs – TA Sogesid, Italian Ministry of Environment

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