Beyond Control: Policy Incoherence of the EU Emissions Trading System

Abstract: In this article, we explain why the current climate policy mix of the European Union (EU), consisting of the EU Emissions Trading System (ETS) and overlapping policies, is incoherent with respect to emission abatement and cost-effectiveness. The concept of policy coherence guides our analysis in identifying the EU ETS’ current dynamic supply adjustment mechanism, the Market Stability Reserve (MSR), to be at the heart of the shortcomings of current market design. Incoherence emerges due to the MSR’s quantity-based indicator for scarcity. It only works well for current and past demand fluctuations, but not for anticipated changes in demand, e.g., caused by a member state’s fossil-fuel phase-out. As a result, instead of fostering synergies as intended, the MSR undermines coherence by creating backfiring interactions and making precise predictions of overlapping policies’ impacts close to impossible. Considering the European Commission’s reform proposal of July 2021, we argue that a ch

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch
• Notes: Veröffentlichungsversion ; begutachtet (peer reviewed) ; In: Politics and Governance ; 10 (2022) 1 ; 256-264

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Veröffentlichung
• (where): Mannheim
• (who): SSOAR, GESIS – Leibniz-Institut für Sozialwissenschaften e.V.
• (when): 2022
• Creator: Willner, Maximilian ; Perino, Grischa

Further information

• DOI: 10.17645/pag.v10i1.4797
• URN: urn:nbn:de:101:1-2023052314420627258259
• Rights: Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 25.03.2025, 1:49 PM CET