The EU can do: The Emissions Trading System is a slam dunk

In brief

The article argues that the EU Emissions Trading System (EU ETS) has evolved from a once-criticized carbon market into one of the European Union’s most effective climate tools. Paul Hockenos says emissions under the ETS were nearly 50% lower in 2024 than when the system launched 20 years earlier, and that emissions from stationary installations and aircraft operators fell by about 5% from 2023 to 2024, helping keep the EU on course for its 2030 target of a 62% reduction in emissions from the sectors covered by the scheme. He explains that the ETS works by steadily lowering the cap on emissions and forcing heavy emitters to buy allowances, thereby creating a financial incentive to invest in cleaner technologies. The article also highlights key recent expansions, including the inclusion of aviation and maritime transport, with shipping companies now required to buy allowances for a substantial share of their emissions tied to EU ports.

The second half of the piece focuses on both the economic benefits and the growing political resistance surrounding the system. In 2024, ETS auctions generated €39 billion in revenue, most of which went to member states for climate investment, with additional funds allocated to the Modernisation Fund, the Innovation Fund, and REPowerEU to support efficiency, clean technology, and reduced dependence on Russian fossil fuels. At the same time, Hockenos notes rising backlash against ETS 2, the new trading scheme for buildings, road transport, and smaller industries, with countries such as Poland, Estonia, Bulgaria, and Slovakia resisting its rollout and trade unions warning that it could raise fuel and energy costs for poorer households unless stronger social protections are put in place. Even so, the article’s conclusion is emphatically positive: emissions trading is now clearly working, Europe is justified in leading with it, and the EU ETS has become a model from which other carbon markets around the world can learn.

‍

Source: https://energytransition.org/2026/01/the-eu-can-do-the-emissions-trading-system-is-a-slam-dunk/