Evaluation of Policy Options to Reform the EU Emissions Trading System - Effects on Carbon Price, Emissions and the Economy

A minimum price for emission allowances offers the best opportunity for the EU Emissions Trading System (ETS) to function as a key policy instrument in reducing CO2 emissions. Such a price floor will create a steady and higher CO2 price, which will stimulate corporations to reduce their CO2 emission and invest in low-carbon technologies. When the price of CO2 is too low, it is often more efficient for companies to buy emission rights rather than to invest in emission reduction