Structural Development of Emissions Trading for the Post-2030 Period from an Economic Perspective

This project supports the German Emissions Trading Authority (DEHSt) and the Federal Ministry for Economic Affairs and Climate Protection (BMWK) in evaluating and further developing the EU Emissions Trading System (EU ETS) beyond 2030. The analysis focuses on economic aspects of emissions trading reforms, ensuring market stability while maintaining climate ambition.

Key Activities:

• Scenario Development: Assessing different EU ETS cap trajectories beyond 2030, addressing potential market liquidity challenges (ETS “endgame”).
• Negative Emissions & Carbon Removal: Evaluating the role of carbon dioxide removal (CDR) and its potential integration into the EU ETS to balance supply and demand.
• Sectoral Expansion: Analyzing the feasibility of integrating agriculture, waste management, and other sectors into emissions trading frameworks.
• Economic Modeling & Market Analysis: Estimating price developments, volatility risks, and potential behavioral changes of market participants under different policy designs.
• Policy Recommendations: Providing strategic input into the EU’s 2026 review of the Emissions Trading Directive and assessing the legislative proposal for implementing the EU’s 2040 climate target.

This project provides critical insights into the future of emissions trading, ensuring its effectiveness as a long-term decarbonization tool while maintaining economic feasibility.