Commission’s EU ETS reforms to have modest impact

The European Commission’s EU ETS reforms for phase 4 after 2020 have been largely welcomed, but their effect on surplus allowances and flagging carbon prices will be limited by continued large-scale free allocation

A long awaited European Commission reform package covering the EU emissions trading system (EU ETS) from 2021 will see steeper annual cuts to the emissions cap but is likely to only modestly boost the carbon price by 2030.  Continuing free allowance allocations could water down its impact.  

The proposed amendments to the EU ETS directive cover emissions reduction, carbon leakage risk, and innovation in phase 4 of the scheme from 2021. 

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