Climate Action

Commission adopts carbon market report

Didcot Power Station in Oxfordshire, England © iStockphoto

In the context of the first State of the Energy Union report the European Commission today adopted a report on the functioning of the European carbon market as part of the Climate action progress report.

This carbon market report covers 2013 and 2014 and also outlines specific initiatives proposed or agreed in 2015.

The report concludes that over the last decade the EU Emissions Trading System (ETS) proved that putting a price on carbon is an effective way to achieve cost-efficient emissions reductions, motivate business and help bring innovative technologies to the marketplace.  Moreover, the first two years of the phase 3 (2013 and 2014) indicated that the system architecture is robust and that the EU ETS has created a functioning market infrastructure and a liquid market.

As a result of the Market Stability Reserve and the measures needed and proposed to meet the increased ambition decided in the 2030 framework, the EU ETS will deliver a meaningful price on carbon emissions, stimulate greenhouse gas emission reductions and play its role as a technology neutral, cost-effective and EU-wide driver for low-carbon investments.

The system not only reinforces the functioning of the internal energy market through its price formation at EU level, but also stimulates the uptake of renewables and other low-carbon and energy-efficient technologies.

The issues covered by the report include:

  • EU ETS infrastructure,
  • Functioning of the carbon market (allowances put in and taken out of circulation, balancing supply and demand),
  • Aviation,
  • Market oversight,
  • Monitoring, reporting and verification of emissions,
  • Overview of administrative arrangements in Member States,
  • Compliance and enforcement,
  • Structural reform of the EU ETS.

The Commission will continue to monitor the carbon market and provide the next report in late 2016.