The European emissions trading system is experiencing drastic price fluctuations, most recently due to the Russian invasion of Ukraine. A minimum price for emissions trading can play an important role in reducing these price fluctuations and price uncertainties, making the development of the emissions price more predictable and strengthening the price signal.
A minimum CO2 price can play a crucial role in incentivising investment in innovative decarbonisation technologies. This position paper examines the current state of the EU ETS and recent developments in the debate on a CO2 minimum price, highlights examples of minimum prices from other emissions trading schemes around the world, explains how a rising CO2 minimum price can accelerate investment in clean technologies, and makes recommendations for the introduction of a CO2 minimum price in the EU ETS.
This paper was prepared by EPICO together with Cleantech for Europe and the Jacques Delors Institute. The paper is available in English here.