The Political Economy of the European Union’s Emissions Trading System

Climate change is considered the major international environmental problem of our time. Emission trading was incorporated in the Kyoto Protocol and is widely presented as the best instrument for combating global warming. The European Union’s Emissions Trading System was the first such trading scheme launched and has become the flagship of the EU’s efforts to fight climate change.

This book analyses the rationale and the basic design of the European Union Emission Trading Scheme. It also discusses its workings during the first two trading periods (2005-2007, 2008-2012) and the initiation of the third phase (2013-2020), following a revision of the scheme. The book offers a critical assessment of the EU ETS from a radical political economy standpoint, challenging mainstream accounts. The analysis reveals the limited environmental effectiveness and distributional injustice of the scheme. It concludes that, since these pitfalls are generated from the nature of the scheme and its embeddedness in the EU capitalist economies, enduring solutions to climate change require radical transformation of the economy and society, including a new energy structure primarily based on renewable energy.