Why not just institute a CO2 tax?

The EU’s Emissions Trading Scheme has been a topic of debate for years and it has been reformed several times. It is often said that a CO2 tax (meaning a tax on the emission of CO2) would be more straightforward. But to this day taxes are still a domestic matter for EU member states. The EU has little say in this. A tax measure can only be realised when all 28 members are unanimously in favour. For ten years the EU has been unsuccessfully trying to implement a price for CO2. Poland, for instance, opposes any measure that jeopardises its national coal industry.

Coming to a joint agreement on a global scale is even more complex. To aim for this is to acquiesce in stagnation. Furthermore, CO2 taxes come with their own problems, as is apparent from the CO2 tax in the Netherlands. 

Given that global or European CO2 taxation is not realistic, we should improve those systems we do have; the EU Emissions Trading System.

The EU’s Emissions Trading System comes with the advantage that the limits for emissions are set and that they are reduced annually. This means that the emissions of companies can never exceed the limits set and you will meet joint emission targets. That's why the limit for emissions, the ‘cap’, should be lowered in the newly proposed EU ETS revision. 


Emission trading