The EU ETS: Its Role in Achieving Carbon Neutrality and Lessons for ETSs in Asia

The following is an introduction to the remarks Asia Society Policy Institute (ASPI) Director of Asia-Pacific Sustainability Alistair Ritchie gave at the 13th International Greenhouse Gas Conference on August 11, 2022.

Asia Society Policy Institute Director of Asia-Pacific Sustainability Alistair Ritchie presented at the 13th International Greenhouse Gas Conference in Seoul on August 11, 2022 on the EU emissions trading system (ETS) and its role in achieving carbon neutrality in the EU, as well as lessons for ETSs in Asia.

The EU ETS is being revised so that it can contribute to the EU’s ‘Fit for 55’ GHG emission reduction target of 55 percent by 2030 from a 1990 baseline, in line with the pathway to net zero GHG emissions. It provides valuable lessons on how an ETS can play a central role in the net zero policy mix. Key lessons for ETSs being implemented in Asia include: developing the ETS cap in line with national GHG emission targets on the pathway to net zero; ensuring broad coverage of emissions; introducing full auctioning for the power sector; establishing an effective fund to support investment in technologies for net zero transition sourced by auction revenue; implementing ambitious GHG emissions intensity benchmarks; and introducing rule-based market stability measures and ensure carbon market liquidity through sufficient third party participants.