9. Guest lecture - EU ETS Reform

Question 1

What is the EU ambition regarding climate?

Answer 1

1. Net zero in 2050
2. At least -55% in 2030

Question 2

Name 1 advantage and 1 disadvantage of cap and trade.

Answer 2

Advantages

1. Efficient emission reduction
2. Direct limit on the emissions

Disadvantages

1. High monitoring costs
2. Carbon leakage

Question 3

Name 2 elements of the EU ETS reform

Answer 3

1. Floor price + price ceiling
2. Reduce supply of allowances faster
3. Adjustment of supply based on surplus

Question 4

What is the market stability reserve?

Answer 4

A mechanism to make supply dependent on surplus.

Question 5

What is the 2023 addition to the market stability reserve?

Answer 5

Cancellation of permits exceeding previous year’s auction volume.

Question 6

What was the main problem of EU ETS?

Answer 6

For a long time prices were too low, and because of this low carbon tech investments were not stimulated.

Question 7

What is CBAM?

Answer 7

Carbon border adjustment mechanism: a carbon tax on import of steel, cement, electricity, fertiliser and aluminium for countries without carbon pricing.

Question 8

When will the supply of allowances stop under Fit for 55?

Answer 8

After 2040.