Priorities for improving the ETS by improving the predictability and transparency of the scheme are set to be managed largely through increased harmonisation across Member States and clearer technical definitions, which will also improve the ETS’ efficiency. Furthermore, linking the ETS with other schemes is seen as a method of building on the ETS as the core of a global carbon market.

In order to preserve a stable regulatory framework for the rapidly developing allowance market over the course of the second trading period, and to allow sufficient lead-time for any adjustments that may arise out of a legislative process, the Commission has said that any adaptations to the design of the EU ETS should take effect at the start of the third trading period in 2013.

“The first phase of the EU ETS has proved to be a valuable learning period not only as a basis for Member States’ national allocation plans for the second trading period 2008 to 2012, but also to inform the review of the scheme,” the report concludes. The report adds that it is crucial that the EU ETS is streamlined and expanded to act as a market-based role model for schemes in other parts of the world.

The Commission is expected to announce its decisions on the first batch of phase two National Allocation Plans over the next week or so.

The full report to the European Parliament and the Council considering the functioning of the EU Emissions Trading Scheme (ETS) can be found at:

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