Reforming the EU ETS: towards a more sustainable revenue recycling

Sven Rudolph, Joseph Dellatte, Elena Aydos and Takeshi Kawakatsu

Chapter 12 in Biodiversity and Climate, 2024, pp 180-197 from Edward Elgar Publishing

Abstract: The EU Fit-for-55 climate package implements a set of reforms to the EU’s flagship climate policy instrument, the EU Emissions Trading Scheme (EU ETS) such as the phase-out of free allocation, the phase-in of the Carbon Border Adjustment Mechanism (CBAM) and the implementation of the Social Climate Funds. This reform process provides a unique opportunity to create not only a more effective but also a more socially just EU ETS. Based on an overview of the rules and actual usages of revenues, the chapter, by applying an advanced set of sustainability criteria, develops an immediately actionable reform proposal for EU ETSs and CBAM revenue recycling that balances environmental, economic and social needs. We will also discuss the political feasibility of our proposal and the potential barriers to be overcome. We hope that our timely proposal makes EU climate policy not only more effective but also politically more palatable.

Keywords: Economics and Finance; Environment; Law - Academic; Politics and Public Policy Sustainable Development Goals (search for similar items in EconPapers)
Date: 2024
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