CEER Response to the Commission’s Review of the European Union Emissions Trading Scheme

The report highlights that the relatively short time period for which allowance caps are set impacts on long-term certainty and predictability. Moreover, the restricted coverage of the scheme does not provide a strong incentive for abatement to occur at the lowest possible cost. It is also suggested that greater harmonisation across Member States would be likely to result in a more robust and efficient scheme. The Regulators believe that free allocation of allowances creates distributional impacts and is not the most efficient method of allocation.