Incentives prices emissions trading scheme updating

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See further details below on: This report analyses amendments to the EU emissions trading scheme (EU ETS) proposed by the European Commission on the 23 January 2008 and their implications for business.

It concludes that the proposals are a bold and significant step in the right direction that correct weaknesses in the current scheme and provide the level of certainty that business and investors have been calling for.

Numerical simulations indicate that the quota price most likely will be several times higher than marginal abatement costs, unless a significant share of allowances is auctioned.

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This report, based on collaborative research with Climate Strategies, examines the workings of the EU ETS to date and offers analysis and recommendations on its future development.

Chancellor Angela Merkel’s climate cabinet has taken up the issue and carbon pricing looks set to be part of a programme of measures meant to ensure that the country reaches its 2030 climate targets.

With other European countries (France, the Netherlands, Sweden, Spain) keen to introduce a carbon floor price, pressure is unlikely to subside even in the electricity sector.

The system includes more than 12,000 power plants and factories across the 28 EU member states plus Iceland, Liechtenstein and Norway, and covers around 45 percent of the EU’s greenhouse gas emissions and around 50 percent of Germany’s.

Other energy-consuming sectors, such as transport, agriculture and heating of buildings, are not included in the EU ETS.

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