TY - RPRT A1 - Flachsland, Christian A1 - Pahle, Michael A1 - Burtraw, Dallas A1 - Edenhofer, Ottmar A1 - Elkerbout, Milan A1 - Fischer, Carolyn A1 - Tietjen, Oliver A1 - Zetterberg, Lars T1 - Five myths about an EU ETS carbon price floor N2 - This policy briefbuilds on theworkshop EU ETS Reform: Taking Stock and Examining Carbon Price Floor Options,held at the Centrefor European Policy Studies (CEPS) in Brussels on July 3, 2018. The workshop was cosponsored by CEPS and the AHEAD and Mistra CarbonExit projects. While the brief draws on insights from workshop discussions, its views are solely those of the authors. The brief outlinesdifferent perspectives on thepast performanceof the EU Emissions Trading System (ETS)in terms of its allowance price (Section 1), analyzes how the recent reform respondedto related challenges(Section 2), and considers the case for introducinga carbon pricefloor in the EU ETS(Section 3). The main part of the brief (Section 4) identifies five myths in the debate of an EU ETSpricefloorand criticallyconfrontsthem. Section 5 concludes by discussing potential entry points for introducing a carbon price floor in the context of the upcoming EU climate policy process Y1 - 2018 UR - https://www.ceps.eu/publications/five-myths-about-eu-ets-carbon-price-floor ER - TY - JOUR A1 - Flachsland, Christian A1 - Pahle, Michael A1 - Burtraw, Dallas A1 - Edenhofer, Ottmar A1 - Elkerbout, Milan A1 - Fischer, Carolyn A1 - Tietjen, Oliver A1 - Zetterberg, Lars T1 - How to avoid history repeating itself: the case for an EU Emissions Trading System (EU ETS) price floor revisited JF - Climate Policy N2 - Several years of very low allowance prices in the EU emissions trading scheme (ETS) have motivated calls to introduce a price floor to correct potential underlying distortions and design flaws, including (i) the political nature of allowance supply and related credibility issues, (ii) potential myopia of market participants and firms, and (iii) waterbed and rebound effects resulting from policy interactions. In the wake of the recent EU ETS reform, allowance prices have sharply increased. This raises the question of whether the case for introducing a price floor in the EU ETS remains valid. We argue that such a price floor, also adopted in several other greenhouse gas cap-and-trade systems worldwide, remains an important improvement in the design of the system, as long as the above-mentioned distortions and design flaws persist. An EU ETS price floor can safeguard against these issues and provides more explicit guidance on the minimum allowance price policymakers consider acceptable. Either as a complement or substitute to the current Market Stability Reserve (MSR), a price floor would thus make the EU ETS less prone to future revision in case of unexpectedly low prices. We identify and confront four prominent arguments against the introduction of an EU ETS price floor. Key policy insights: - An EU ETS price floor would be an important institutional innovation enhancing political and economic stability, and predictability of the EUA price - The recent Market Stability Reserve (MSR) reform has not removed the need for a carbon price floor. - Introducing an element of price responsiveness into the so far purely quantitative design of the EU ETS would help to preserve its integrity - In contrast to conventional wisdom, legal analysis reveals that an EU ETS price floor can be legally feasible - Political support for a carbon price floor is gaining traction across Europe KW - EU ETS KW - price floor KW - market stability reserve KW - policy credibility Y1 - 2020 U6 - https://doi.org/10.1080/14693062.2019.1682494 VL - 20 IS - 1 SP - 133 EP - 142 ER -