Policy makers reformed the European Union (EU) Emission Trading System (ETS) to address low prices and price volatility. They reduced the cap and strengthened the Market Stability Reserve (MSR). The effectiveness of these reforms hinges on path dependency of emission and abatement technology....

We show that power generators responded largely in line with theory to the European Union (EU) Emission Trading System (ETS). In particular, between 2008 and 2018: (i) the qualitative response of the EU ETS allowance price to variations in both the gas and coal price—the two preeminent drivers...

Policy makers reformed the European Union (EU) Emission Trading System (ETS) by tightening the cap and strengthening the Market Stability Reserve (MSR) the market’s dynamic supply control mechanism. The capacity of the reformed EU ETS to deliver on the reform objectives is to be evaluated on...