LONDON (Reuters) - The European Union’s Emissions Trading Scheme (EU ETS) is a success and its flaws have not harmed its basic aim of reducing carbon dioxide emissions, multi-national research showed on Friday.
Experts at French state bank Caisse des Depots, the Paris-Dauphine University, the Center for Energy and Environmental Policy Research in the United States and University College Dublin collaborated to evaluate the scheme’s trial period, which has widely been viewed as a failure.
The EU’s flagship carbon trading scheme requires companies to buy permits for each tonne of carbon they emit. Carbon output is capped and the level is lowered year by year.
The scheme’s first trading phase ran from 2005 to 2007. Installations in the 27-nation bloc were over-allocated with carbon permits and the carbon price fell to zero.
The research concluded that although there were many problems in the first phase, they were overcome and did not hamper the scheme’s ultimate objective of reducing emissions.
“The sometimes voiced argument that the EU ETS has been a failure cannot be sustained on the basis of the evidence,” the research authors said.
Emission cuts were achieved in a cost-effective way, without losing competitiveness, they said.
The cost of carbon is also now a firmly established factor in European power market’s investment decisions, the research said.
The main accomplishment of the trial period was the successful creation of a regulatory mechanism, which will serve to deliver more ambitious emissions cuts and will be the cornerstone of a potential global carbon market.
“The EU ETS is a path-breaking policy experiment whose implications will extend far beyond the EU,” the authors said.
A UK Parliamentary committee criticized the scheme on Monday, saying the carbon price was too low to deliver low-carbon investment.
It urged the UK government to press the EU for tighter carbon caps and other measures.
Reporting by Nina Chestney; Editing by Keiron Henderson