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As of 2027, the EU will implement a second Emission Trading System (EU ETS 2) to cap emissions in buildings, road transport and small industries not covered by the already existing European Emissions Trading System. Substantial uncertainty remains regarding potential price trajectories and their underlying drivers. In light of this, we explore EU ETS 2 price paths using the energy system model PRIMES. We focus on the effect of complementary efficiency policies (EPs), as earlier research suggests they could have a profound impact. Indeed, analyzing three scenarios with different EPs stringency, we find that they make EU ETS 2 prices vary between 71 EUR/tCO2 and 261 EUR/tCO2 in 2030. Despite different instruments driving emission abatement, comparable emission reductions at the EU level (−41%) are achieved in all three scenarios.
Günther et al. (Wed,) studied this question.