Preliminary report Emission Allowances and derivatives thereof

23/11/2021 | ESMA

1 Executive Summary

Reasons for publication

The European Trading Scheme (ETS) is a key tool of the EU policy against climate change. It puts a price on the CO2 that entities subject to compliance obligations can release to the atmosphere, with the overall objective of reducing net greenhouse gas emissions. In its Communication on Energy Prices “Tackling rising energy prices: a toolbox for action and support”, published on 13 October 2021, the European Commission highlights that questions have emerged around the functioning of the European carbon market. In order to examine more closely patterns of trading behaviours and the potential need for targeted actions, the Commission asks ESMA for a first preliminary assessment of European carbon markets by 15 November and tasks it to analyse, by early 2022, the trading of emission allowances (EUA). This report presents the preliminary assessment of carbon markets and derivatives thereof.

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