THE REFORMED EU EMISSION TRADING SYSTEM TO REDUCE GREENHOUSE GASES (GHGS) EMISSION – A LEGITIMATE, EFFECTIVE AND EFFICIENT EU LEGAL REGIME?

Abstract

For two decades, the EU has been attempting to reduce its carbon emissions, lower the concentration of GHGs and reverse the global climate change and other negative consequences. Since the EU opted for an emissions trading system (“EU ETS”) as the principal strategy and mechanism to achieve it, the ongoing and massively amended Directive 2003/87/EC is the legislative backbone in this arena. The EU Policy Guidelines 2019-2024 set as the top priority the European Green Deal, which led to a set of legislative proposals reforming the EU climate and energy policy in 2021 (“Fit for 55”). Six of these proposals were approved in 2023 and reformed the EU ETS. Due to its massive importance and multi-dimensional impact, the newly reformed EU ETS has been exposed to both laudatory and disparaging assessments which are further magnified due to international political events in 2025. In this context, it is highly relevant to map the development and status quo of the EU ETS legal regime and assess its legitimacy, effectiveness and efficiency.