The EU ETSʼs impact on renewable energy growth and a sustainable economy – a critique –

Abstract: The EU ETS emission-trade system must both enable a decrease in GHG-emissions and be a driver for growth in the renewable energy-sectors. Implemented in 2005, it has been given fifteen years until 2020 to show some acutely needed results. The EU ETS was set out to meet both ecological and economical challenges at once and it is the worlds largest, most encompassing and most expensive climate-program to date. However, despite this, this study shows that the EU ETS has barely managed to do the former. Today, midway, the results from the EU ETS are both disappointing and worrying, and a call to seriously question its construction is due. The EU ETS has primarily caused short-term, and inconsistent, reductions in GHG-emissions but it has failed at driving long-term investments and innovation in renewable energy technologies. In short, the EU ETS cannot cause a shift toward a sustainable economic and environmental growth. Recurring price crashes, apparent in-effectivity in pushing re-investments in renewable sectors and counter-productive energy-price competitiveness, and not least that it in January 2013 enters into its final phase, are just a few of the many reasons to further study this subject. Research on why, and in what context, the decision of opting for an emission-trade system, as opposed to other alternatives such as carbon taxation, is needed to make suggestions of both where the EU ETS is headed, and also what the alternative routes could look like. This study shows that the EU ETS was implemented on disputable grounds and that it was never meant to meet its current objectives. It is also suggested that the continued revisions of the EU ETS are unlikely to change this and that the system will only prolong the shift to a better suited type of approach on climate.