ABSTRACT
The European Union (EU) emissions trading system (ETS) is the EUs climate policy flagship, intended to steer Europe towards a low-carbon economy in the short- and long-term. The EU has invested significant political capital in making the system work, and researchers have invested significant intellectual capital in explaining how it works. Higher carbon prices still have many supporters, among them the electric power industry and its industry association Eurelectric. Eurelectric wants policymakers to accept that the EU ETS, in contrast to renewables and energy-efficiency policies currently executed through national approaches, should drive the decarbonization of Europe. Fundamental economic driving forces notwithstanding, allowing the EU ETS to produce higher carbon prices actually boils down to a question of politics the political willingness to make changes in the design of the ETS or impose additional policy measures to support higher carbon price levels.
