When it first launched in 2005, the European Union emissions trading system (EU ETS)
expected to see carbon dioxide prices of around 30/ton and be a cornerstone of the EU's
climate policy. The reality was a cascade offalling prices, a ballooning privately held
emissions bank, and a decade of muted incentives for investment in the technology and
innovation necessary to achieve long-term climate goals. The European Commission
responded with various administrative measures, including postponing the introduction of …

The EU ETS has implemented a variety of reforms to attempt to boost market prices, but
have resisted a minimum auction price. Opponents to implementing a price floor argue it
would interfere with the market and be tantamount to a tax. This analysis shows that a
minimum auction price is a component of good program design. A minimum auction price is
necessary to accommodate the portfolio of overlapping energy and climate policies. Legal
analysis finds a minimum auction price would not be a fiscal instrument (tax) and would not …