Harmonised Allocation Rules in European Emissions Trading: Results for Germany

Christiane Ochsenreiter and Alexandra Zirkel, Umweltbundesamt, DEHSt, Deutsche Emissionshandelsstelle, argue in favour of a reform of emissions trading. They see the European Commission's proposal to introduce a market stabilisation reserve at the beginning of the fourth trading period (2021) in order to remove excess emission allowances from the market and thus stabilise prices as a step in the right direction. However, the permanent mopping up of current market excesses, as well as the introduction of the market stability reserve proposed by the European Commission as early as the third trading period, are essential to restore the incentive effect of EU emissions trading.