European Commission Presents Options on EUETS Reform
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The European Commission has released a report titled "The State of the European Carbon Market in 2012," which presents options for reforming the EU Emissions Trading System (ETS) to resolve the short term challenge of emission allowance surpluses related to the economic crisis, and to increase emissions reduction ambition in the medium term.

The report includes a draft amendment to the EU ETS Auctioning Regulation to "back load" auctioning of emission allowances.

14 November 2012: The European Commission has presented options for reforming the EU Emissions Trading System (EUETS) to resolve the problem of supply-demand imbalances of emission allowances. The proposal calls for back-loading auction volumes in 2013 to reduce the allowance surpluses that have accrued during the economic crisis, and launching a debate on structural reform measures.

The options are presented in a report titled “The State of the European Carbon Market in 2012,” which includes a draft amendment to the EU ETS Auctioning Regulation that would shift auctioning of 900 million emission allowances from the period 2013-2015 to 2019-2020. The report also identifies six options for structural change to the EU ETS, including: reducing the overall EU ETS cap by 1.4 billion allowances between 2013-2014 to bring ambition in line with a 30% reduction in greenhouse gas (GHG) emissions by 2020; retiring some phase 3 allowances permanently; changing the linear factor of 1.74% by which the emission cap under the ETS decreases, resulting in increased ambition over time; expanding to other sectors; reducing access to international credits after 2020; and creating discretionary price mechanisms to provide price support. [EU Press Release] [EU Question and Answer] [European Commission DG-Climate Press Release] [Publication: The State of the European Carbon Market in 2012]

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