Too many CO2 allowances on the market?

Published 17-10-2012
In a joint comment to the on-going review of the auctioning of the EU Emissions Trading System (ETS), Iceland, Liechtenstein and Norway believe that it may be necessary to withdraw permanently a substantial amount of allowances from the system to ensure a sufficient high price level and a subsequent reduction of greenhouse gas emissions in the long run.

The three EEA EFTA States are concerned about the low price level of CO2 allowances in the EU ETS market and are of the opinion that this should be addressed in a proper manner as soon as possible. They therefore support the option proposed by the European Commission foreseeing the largest change in the auctioning time profile, which would see the auctioned amount reduced by 1.2 billion allowances in the years 2013 to 2015.

The EEA EFTA States are however of the opinion that it is unlikely that delaying the introduction of ETS allowances to be auctioned will have much influence on prices or any effect on greenhouse gas emissions over a longer time period. To ensure a higher price level throughout the next phase of the EU ETS system and beyond, the EEA EFTA States strongly believe that structural measures will also have to be implemented, such as retiring permanently an appropriate amount of allowances from the system.

The EEA EFTA comment is available here.

Was the content helpful?