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Carbon Markets Research
This report presents a quantitative analysis of the reform of the EU ETS known as the Market Stability Reserve, with recommendations for European governments and for members of the EU Parliament. The latest version of Thomson Reuters' proprietary CO2 price forecasting model is used to produce forecasts and sensitivity analyses for different design options for the Market Stability Reserve. How the Reserve is designed is found to greatly infuence how soon the oversupply in the market is diminished, what trajectory the carbon price follows, what kind of investment signal is sent to the private sector, and how much abatement is triggered by the EU ETS.
This report presents the first independent quantitative analysis of the European Commission's proposal to establish a Market Stability Reserve for the European Union Emissions Trading System.