Anatomy of emissions trading systems: what is the EU ETS?

Aviel Verbruggen, Erik Laes (Corresponding author), Edwin Woerdman

Research output: Contribution to journalArticleAcademicpeer-review

9 Citations (Scopus)
36 Downloads (Pure)


An anatomy identifies four main components of actual or proposed Emissions Trading Systems (ETS): (1)Pursued policy goals with the ETS instrument; (2)Public authority allocations of permits to the regulated participants; (3)Carbon emissions price levels; and (4)Participants’ abatement expenses dependent on the ready availability of affordable abatement techniques or of low-carbon innovation opportunities. These components cover a range of options. A different assemblage of options delivers different ETS exemplars. Two main exemplars are identified. The actual EU ETS is highly successful in meeting the goal of low financial burdens on EU industry, thereby precluding carbon leakage. The other exemplar opts for high carbon emissions prices in the EU to induce industrial innovations towards a low-carbon economy. Incumbent industrial interests oppose this exemplar. Contrary to current policy discourse and to wishful proposals, both ETS exemplars cannot co-exist. ETS anatomy offers insight and structure for thorough analysis and evaluation of existing ETS, resulting in context–specific and appropriate designs of the carbon trading systems.

Original languageEnglish
Pages (from-to)11-19
Number of pages9
JournalEnvironmental Science and Policy
Publication statusPublished - 1 Aug 2019


  • Carbon leakage
  • Carbon pricing
  • Climate policy
  • Emissions trading design
  • EU ETS
  • Induced innovation

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