Launched in 2005, the European Union’s Emissions Trading System (EU-ETS) is the largest carbon trading market in the world. It is the EU’s principal policy mechanism for reducing greenhouse gas emissions in the power generation and industrial sectors. But the EU-ETS is not delivering the CO2 cuts required by science, historical responsibility and sound financial practices.

Ongoing reliance on the Emissions Trading System is a risk that cannot be taken. The EU must urgently increase its emissions target to at least 40% – the upper ‘safe’ level set by the IPCC – and ensure that these cuts are domestic. This calls for strong political will. Rather than depend on the uncertain, ineffective, and unfair Emissions Trading System, the EU must privilege other forms of action. This includes tougher laws to develop renewables and increase energy efficiency, as well as carbon taxation and incentives for public and private investment to pay for emissions cuts.