logo-eui RSCAS
FSR

Event Highlights


Gas

Event Highlights

16.04.2018

Can Renewable Gas Contribute to the EU Decarbonisation Efforts?

Last Monday, the 9th of April 2018, the Florence School of Regulation organised a Policy Workshop “The Renewable Gas Complex and the European Path to […] read more

Climate

Event Highlights

20.03.2018

FSR Climate Residential training course: highlight video online

The LIFE SIDE Residential Training Course on the EU ETS took place in Florence, on 7-8 March 2018. The course gathered 21 participants, mostly policy makers from […] read more

Climate

FSR Regulatory Policy Workshop Series 2016-2017

Event Highlights

6.03.2018

The Reform of the EU ETS: what implications for the Energy Markets of the future?

On Friday 23 February 2018, the Florence School of Regulation hosted the FSR Policy Workshop: ‘The Reform of EU ETS and its Implications for the […] read more

Electricity

Alberto Pototschnig

Event Highlights

24.01.2018

Market Abuse or Abuse of Market Power in Wholesale Energy Markets?

On 12 January 2018, the Florence School of Regulation held the second session of its 2017-18 Regulatory Policy Workshop Series on the topic ‘Market Abuse […] read more

Energy Union Law

gas pipeline

Event Highlights

20.12.2017

FSR and BNetza Forum on the Legal Issues of Energy Regulation

The 9th edition of the FSR and BNetza Forum on the Legal Issues of Energy Regulation from  October 27th 2017, tackled challenging issues of today’s […] read more

Energy Union Law

Gas

Event Highlights

17.11.2017

Future Challenges in the EU Gas Market

On October 26 2017, the FSR Energy Law and Policy Area organised the Seminar “Future Challenges in the EU Gas Market”. Security of Supply is […] read more

Electricity

Alberto's Workshop

Event Highlights

8.11.2017

Demand Participation and Demand Response in Electricity Markets: which way forward?

The ongoing energy transition, with the resulting penetration of renewable energy sources, requires a higher level of flexibility in the electricity markets. Demand, through a […] read more

Climate

News climate carbon market video highlights

Event Highlights

12.10.2017

Video highlights from Carbon Market Workshop

Organised by FSR Climate within the framework of the LIFE SIDE project,  the Carbon Market Workshop gathered carbon market experts worldwide to discuss and exchange experiences in […] read more

Energy Policy

new york

Event Highlights

3.07.2017

Regulatory Futures Workshop

On 9-10 June 2017, Jean-Michel Glachant, Director of the Florence School of Regulation, attended the Regulatory Futures Workshop at Columbia University School of Law in […] read more

Page 1 of 3123
FSR Regulatory Policy Workshop Series 2016-2017

The Reform of the EU ETS: what implications for the Energy Markets of the future?

- Climate

On Friday 23 February 2018, the Florence School of Regulation hosted the FSR Policy Workshop: ‘The Reform of EU ETS and its Implications for the Energy Markets’.

The event, attended by academics, practitioners and representatives of European and national institutions, investigated the main motivations and challenges related to the reform of the EU Emission Trading Scheme (ETS) for the period beyond 2020.

The EU ETS was first introduced in 2005 to create a market for GHG emission allowances (EUAs) – setting a price for carbon emission reflecting their negative externalities. Its implementation was hindered by the economic crisis in 2008-09 and 2012-14, as well as by the overlapping and interference of other European policies in the field of renewable energies and energy efficiency. Consequentially, the demand for EUAs has been lower than expected: given the fixed ‘supply’ of allowances, prices have inevitably gone down, reducing the effectiveness of the EU ETS in promoting any fuel and/or technology switching.

The scheme has been recently reformed, with the hope of strengthening its role as a driver towards a low-carbon economy. The reform is based on three main pillars: 1) supporting innovation by funding low-carbon technologies’ deployment and the modernisation of the energy sector; 2) tightening the cap (linear reduction factor of 2.2% from 2021 onwards) and setting a new emission reduction target (by 43% by 2030); 3) improving the rules to cope with the problem of carbon leakage. With the reform, a Market Stability Reserve (MSR) mechanism has also been introduced.

During the workshop, a consensus was reached on the fact that the EU needed a revision of the EU ETS and that the scheme’s effectiveness and consistency with the other policy tools had to be strengthened. Unfortunately, it was also recognised by some that the MSR, as defined in the reform, might not be enough and may arrive too late to change the situation emerged in the past decade.

The discussion strongly highlighted the necessity for enhanced coordination between environmental and energy policies, both at the European and national level. As the transition to a low-carbon economy is a joint effort, the implications of uncoordinated national measures should not be underestimated, as they might hamper the effectiveness and efficiency of the European approach. Furthermore, it was largely agreed that for the EU ETS to be effective, a higher price for carbon must be matched by long-term signals that reduce the uncertainty currently suffered by investors. Demand-Response, storage and other policy instruments can support the significant capital investments necessary to decarbonise the electricity mix, but they will hardly substitute the introduction of long-term contracts between the developers of renewable power plants and the buyers of electricity.

In short, to ensure the financeability of the capital-intensive generation investments required by the energy transition, a new market design for electricity must be adopted, where long-term tools for effective investment complement short-term tools for efficient operation.

180223 Workshop: The Reform of the EU ETS and its Implications for the Energy Markets