EU Carbon Market History: From the EU ETS to CBAM and ETS2

The EU carbon market is not one system. The EU ETS is a cap-and-trade market launched in 2005 that prices emissions from EU power plants and factories. CBAM is…

First CBAM Certificates Purchased; ETS2 Pushed to 2028

Importers begin purchasing CBAM certificates in February 2027 covering 2026 imports. ETS2, delayed one year in a November 2025 decision, becomes fully operational for co…

CBAM's Definitive Regime Begins; MSR Withdraws 190 Million Allowances

CBAM's definitive regime begins 1 January 2026: free EU ETS allocation for CBAM sectors starts phasing out, and the Commission publishes the first CBAM certificate price…

Fit for 55 Becomes Law: CBAM Launches, ETS2 Is Created, Maritime Joins

The EU adopts CBAM (Regulation (EU) 2023/956) and the revised ETS Directive creating ETS2 (Directive (EU) 2023/959) in 2023. CBAM's reporting-only transitional phase run…

Fit for 55 Proposed; EU ETS Phase 4 Begins; Climate Law Binds 2050

The European Commission proposes the Fit for 55 package in July 2021, targeting a legally binding 55% net emissions cut by 2030 - the blueprint that eventually produces…

The Market Stability Reserve Goes Live; the Green Deal Is Announced

The Market Stability Reserve begins operating 1 January 2019, automatically withdrawing allowances when the total in circulation exceeds a threshold. Prices, mostly belo…

Phase 3: A Single EU-Wide Cap Replaces 30 National Ones

Phase 3 (2013-2020) replaces 27-30 separate national allocation plans with one EU-wide cap, falling by a fixed linear factor each year. Auctioning becomes the default al…

Phase 2 Begins - and a Financial Crisis Crushes Demand

Phase 2 (2008-2012) aligns the EU ETS with the Kyoto Protocol's first commitment period and tightens the cap. The global financial crisis cuts industrial output, meaning…

The Phase 1 Carbon Price Collapses Toward Zero

Phase 1 allowances were allocated on estimated, not verified, emissions data. When verified 2005 emissions came in below the allowances issued, the market realised there…

The EU ETS Launches - the World's First Major Carbon Market

The EU Emissions Trading System begins operating 1 January 2005, covering power generators and energy-intensive industry. Almost all Phase 1 allowances are free. A non-c…