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Journal Article

Carbon prices on the rise? Shedding light on the emerging second EU Emissions Trading System (EU ETS 2)

Authors
/persons/resource/claudia.guenther

Günther,  Claudia
Potsdam Institute for Climate Impact Research;
Submitting Corresponding Author, Potsdam Institute for Climate Impact Research;

/persons/resource/Michael.Pahle

Pahle,  Michael
Potsdam Institute for Climate Impact Research;

Govoruhka,  Kristina
External Organizations;

/persons/resource/Sebastian.Osorio

Osorio,  Sebastian
Potsdam Institute for Climate Impact Research;

Fotiou,  Theofano
External Organizations;

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Citation

Günther, C., Pahle, M., Govoruhka, K., Osorio, S., Fotiou, T. (2025 online): Carbon prices on the rise? Shedding light on the emerging second EU Emissions Trading System (EU ETS 2). - Climate Policy.
https://doi.org/10.1080/14693062.2025.2485196


Cite as: https://publications.pik-potsdam.de/pubman/item/item_32144
Abstract
As of 2027, the EU will implement a second Emission Trading System (EU ETS 2) to cap emissions in buildings, road transport and small industries not covered by the already existing European Emissions Trading System. Substantial uncertainty remains regarding potential price trajectories and their underlying drivers. In light of this, we explore EU ETS 2 price paths using the energy system model PRIMES. We focus on the effect of complementary efficiency policies (EPs), as earlier research suggests they could have a profound impact. Indeed, analyzing three scenarios with different EPs stringency, we find that they make EU ETS 2 prices vary between 71 EUR/tCO2 and 261 EUR/tCO2 in 2030. Despite different instruments driving emission abatement, comparable emission reductions at the EU level (−41%) are achieved in all three scenarios.