REFORMING THE EU EMISSIONS TRADING SYSTEM: CAUSES AND CONSEQUENCES

The EU Emissions Trading System (EU ETS) is the world`s first large-scale international emissions trading system. The system represents a grand experiment in climate policy aimed at restructuring European energy production and use at lowest cost possible. The system is still in the making, with major changes proposed by the European Commission in 2008. A major problem experienced so far has been allocation of too many allowances to participating industries. There has, however, been little research on how the system actually has worked: has it changed the behaviour of big industrial emitters? This project will analyse the reform of the EU ETS and assess the revised system`s prospects to deliver innovation and reductions in greenhouse gas (GHG) emissions, c ombining insights in the EU policy initiation and decision-making process and implementation at the company level.