Europe faces the twin problems of debt and economic uncertainty and these challenges are reflected in the state of its climate and energy policy – particularly the EU Emissions Trading System. The right policy responses on this could also enhanceEuropean prospects for economic stabilisation, investment and recovery.

But what are the right policy responses, how politically feasible are they, what are the timescales and are they ambitiousenough? The latest CS research on ‘Strengthening the EU ETS – Creating a stable platform for EU energy sector investment, discusses options to intervene in the EU ETS against a backdrop of falling EUA prices and the associated loss of a meaningful financial driver for longer-term investment in low carbon infrastructure. This report presents options available to policymakers, arguing that a single measure such as set-aside is unlikely on its own to deliver long-term policy certainty and price outcomes.