New EU ETS Phase 4 rules temporarily puncture waterbed

Matters Arising to this article was published on 25 September 2019

An Author Correction to this article was published on 15 February 2019

This article has been updated

The new rules of the EU ETS will fundamentally change its character. The long-term cap on emissions will become a function of past and future market outcomes, temporarily puncturing the waterbed and having retroactive impacts on GHG abatement from overlapping policies.

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Fig. 1: The MSR in three operational states.
Fig. 2: Cumulative effect of abating one ton of CO2e on long-term emissions reduction for Phases 2–4.

Change history

  • 15 February 2019

    In the version of this Comment originally published, the scenario in which the market stability reserve (MSR) takes in allowances for seven years was calculated using incorrect x and y values in the formula described in the caption of Fig. 2; the red bars in Fig. 2 have now been updated. In the sentence “each subsequent year the number of allowances auctioned is reduced by 24% (12% after 2024) of the size of the bank” the year should have been 2023. These errors have now been corrected.


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I thank J. Jarke, S. Petrick and M. Willner for helpful comments.

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Correspondence to Grischa Perino.

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Perino, G. New EU ETS Phase 4 rules temporarily puncture waterbed. Nature Clim Change 8, 262–264 (2018).

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