Introduction Since the late 1990s, the EU has explicitly decided to take the lead in action addressing climate change, and has made common action against global warming an important part of its foreign environmental policy (European Commission 2008). The EU has laid down this goal in its Climate and Energy package of 2010, in which it committed to a reduction of 20 per cent in greenhouse gas emissions by 2020 relative to a 1990 baseline (European Commission 2010). In October 2014, the Council of the EU adopted a reduction target of 40 per cent as part of the 2030 Framework for Climate and Energy Policies (European Council 2014, p. 1). The flagship of this policy is the EU emissions trading system (EU ETS), as laid down in Directive 2003/87 (hereafter ‘the Directive’) (Official Journal 2003a). This will remain so in the period until 2030,2 despite major challenges to the EU ETS that emerged during the economic crisis. These were mainly caused by a growing surplus of emission allowances, which undermined the trade in the carbon market. Although the EU ETS is now in its third trading phase, so far the outcomes in terms of emissions abatement have been minor (Department of Energy and Climate Change 2013). The price for CO2 has simply remained too low to encourage the industry to invest in low carbon technology. This, in turn, was caused by a cap that was set too high; the financial crisis, which caused a reduction in production; ‘offsetting’ of emission reduction abroad; and a reduced need for electricity caused by warm weather.3