The EU-ETS Price Through 2030 and Beyond: A closer look at drivers, models and assumptions

Input material and takeaways from a workshop in Brussels

Publication: Conference Paper
Citation: Pahle, Michael et al. 2022: The EU-ETS price through 2030 and beyond: A closer look at drivers, models and assumptions. Input material and takeaways from a workshop in Brussels. Documentation.

This document presents main takeaways and insights from a workshop organised by the Ariadne Project in Brussels on 30 November 2022. The workshop convened experts from seven organisations that operate carbon market models – academic institutions as well as carbon market analysts.

The goal of the workshop was to discuss in-depth the types of models, implementation details as well as core assumptions employed in the analysis of ETS prices targeted to inform the policy debate. More specifically, the workshop served to take stock of the diversity of approaches, discuss their pros and cons, and identify major sensitivities and arising developments affecting the price of EU Allowances (EUAs) through the end of this decade and beyond. In preparation of the workshop, all participants took part in a survey and provided a short model fact sheet, information about EUA in their default "Green Deal/FF55 COM" scenario, as well as an assessment of what they view as the main price drivers in 2025 and 2030.

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This paper is a slight adaptation of the German-language analysis "Wasserstoffimportsicherheit für Deutschland – Zeitliche Entwicklung, Risiken und Strategien auf dem Weg zur Klimaneutralität", published in December 2021. The analysis takes a close look at Germany’s future need for hydrogen imports, hydrogen import-related risks as well as strategies to secure hydrogen imports.

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30 November - 2 December 2022
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Event:Digital Event

While policymakers are currently mulling over the EU-ETS reform, it is a good time for analysts and scientist to take a step back and discuss the analytical tools used to project the outcome – specifically: the expected, predicted or necessary carbon price(s) towards 2030. To that end, the Potsdam-Institute for Climate Impact Research (PIK) and Ecologic Institute organize a workshop in Brussels on 30 November 2022.

The EU-ETS Price Through 2030 and Beyond

A closer look at drivers, models and assumptions

30 November 2022
online

Publication:Article

Social concerns around introducing a carbon price for transport and heating fuels (ETS2) are legitimate. But the EU Parliament overshot the mark in its aspiration to cushion households, which becomes apparent in its request for changes to the Social Climate Fund (SCF), write Michael Pahle, Nils aus dem Moore and Benjamin Görlach in their article for EURACTIV.

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Year 2022

Publication:Report

In this Ariadne publication, experts from Ecologic Institute, Potsdam Institute for Climate Impact Research, RWI – Leibniz Institute for Economic Research, Mercator Research Institute on Global Commons and Climate Change, Stiftung Umweltenergierecht, ZEW – Leibniz Centre for European Economic Research and IER Stuttgart analyzed various options for the relief and level of the CO2 price – and identified advantages and disadvantages as well as implementation requirements of different design options. The focus is on two key political points of contention, where scientific findings can prevent an impending hardening of the position and thus promote a consensus that is conducive to climate protection.

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Year 2022

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Year 2022

Event:Digital Event

With the Fit for 55 package, the European Commission made far-reaching proposals in July 2021 to align the architecture of European climate policy with the goal of climate neutrality. These proposals include the strengthening of the existing emissions trading scheme, the introduction of new emissions trading for transport and buildings, a border adjustment mechanism (CBAM) to protect against carbon leakage and the tightening of regulatory instruments for transport and buildings. However, the proposals raise a number of questions – from distributional effects and acceptance to the consistency of the instruments. In the course of this two-day hybrid event, researchers from the Ariadne consortium discussed these issues with stakeholders and decision-makers at the European level.

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25 - 26 November 2021
online, Brussels, Belgium

Publication:Policy Brief

From sector coupling to hydrogen, from the implementation of the Climate Protection Legislation to the European Green Deal: Achieving climate neutrality requires coordinated and effective policy management across individual departments. Climate policy is a cross-cutting task, because all sectors, from power generation to industry, buildings, transport and agriculture, must become greenhouse gas neutral without delay. Experts from the Ariadne Copernicus project, which is funded by the German Federal Ministry of Education and Research (BMBF), have examined central problems of government control of German climate policy and presented options for solutions. The paper was also sent to negotiators of the coalition talks in the run-up to publication.

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Ariadne-Kurzdossier

Year 2021

Language: English
Authorship: Benjamin Görlach

Dr. Michael Pahle, Joanna Sitarz, Dr. Sebastian Osorio (PIK)
Funding: Federal Ministry of Education and Research (BMBF), Germany
Year: 2022
Dimension: 47 pp.
Project: Evidence-based Assessment for the Design of the German Energy Transition (Ariadne)
Project ID: 30003
Table of contents: Click to show full table of contents

Workshop: goal and set-up
1. Survey results
Different modelling approaches to forecast the EU ETS prices
Different models deliver convergent expectations about EUA price development in the medium term
Main expected price drivers will continue to be ETS policy parameters and power sector, but industry sector will gain importance
2. Main takeaways and insights from workshop discussions
Long-term convergence of most models implies stronger choice constraints and/or converging expectations as decarbonization progresses
Overlapping policies are one key driver of projected prices – but implementation matters, not targets
Industrial emitters play a growing role in the carbon market, changing market dynamics – and modeller's understanding of them
(To what extent) does the carbon market factor in long-term scarcity?
Appendix I: Completed questionnaires
Appendix II: Summary slides (for webinar)
Keywords: Climate

Economics

Energy