What does the European power market need to decarbonise? The Role of the EU ETS and complementary policies post-2020
It appears that there is an emerging contradiction at the heart of decarbonisation policy in the EU power sector: On the one hand, there is increasing recognition of that as the share of renewable and
low‐carbon electricity generation becomes larger, the existing wholesale electricity market design in many EU countries will struggle to drive the necessary investments in the power sector during the low‐carbon transition. On the other hand, a number of EU institutions, including the EU Council and the Commission, have continued to assert the central role of the ETS – an instrument based on the economics of the existing power market design – in electricity sector decarbonisation.
Type: Final paper