Evaluating emissions trading as a policy instrument

Emissions trading, currently the main instrument of climate policy in Europe, will continue to gain importance in the future. The particular qualities of the market for CO2 pollution rights differ from other financial markets: numerous decisions on regulatory conditions must be made that have far-reaching effects on trading and consequently on prices. This can lead to price hikes in emissions certificates. As a result there is a particularly great insecurity on this market, which also affects the behaviour of enterprises regarding the avoidance of CO2 emissions and that leads to delays in investments in avoidance technologies.