What you need to know about ETS
Episode description
In this episode of The Sound of Economics, host Rebecca Christie speaks with Bruegel’s Simone Tagliapietra and Flora Marchioro about the European Union’s pathbreaking carbon trading scheme. Two decades in, what have we learned about capping emissions and using tradeable allowances to rein in pollution from energy-intensive sectors? What are the stakes of this year’s review of ETS, which includes electricity and heat generation, industrial manufacturing, domestic aviation and the maritime sector? Why is the EU now creating a second round of ETS 2, covering buildings and road transport, and what are its prospects? Who gets the money from ETS revenues and how is it earmarked? And how is the EU working to prevent carbon leakage and manage its new carbon border adjustment mechanism? This discussion will get you up to speed and ready for what comes next.
Relevant research:
Tagliapietra, S. and G. Zachmann (2026) 'Five reasons why attacking the EU carbon market is economic self-sabotage', First Glance, Bruegel
- Pahle, M., D. Sultani and G. Zachmann (2026) 'Defragmenting European Union climate policy', Policy Brief 03/2026, Bruegel