LIFE: on a mission to create a user-friendly carbon market

Launched in 2005, the EU Emissions Trading System (EU ETS) was the world’s first carbon market and remains one of the largest. Its aim: to drive greenhouse gas emissions (GHGs) down and the funding for Europe’s green transition up. Covering electricity, heating, industrial manufacturing, aviation - and now shipping - the EU ETS has helped to cut emissions by nearly half in less than two decades. 

But emissions need to fall still further. The European Climate Law stipulates that GHGs must be cut by 62% of 2005 levels by 2030 - just six years away. That’s where LIFE Collaborative Observatory for ASsessment of the EU ETS (LIFE COASE) comes in. The €1.3 million, three-year project aims for a more coordinated approach to monitoring the EU ETS using new measuring tools and more user-friendly data collection. 

The EU ETS works on the ‘polluters pay’ principle. Heavy polluters must reduce, monitor and report their emissions annually- and if they don’t, they pay a fine for every tonne they are over their set emissions allowance, or cap.  

LIFE COASE is on a mission not only to improve the way the EU ETS collects and stores data, but to make that data more widely available and understood. It raises public awareness of emissions trading through publications, podcasts, policy briefs, datasets and events. 

‘We still know too little about how ETSs function and affect  competition, social equity and environmental outcomes on the way to net zero,’ says Simone Borghesi, Climate Director at the Florence School of Regulation and coordinator of LIFE COASE. ‘In particular we want to improve the usability of the database by matching the information with other databases so we can improve usability.’ 

LIFE COASE stresses the need for international cooperation to tackle climate change. The stringent EU ETS regulations may have unintended consequence such as businesses shifting their operations to countries with more relaxed policies. The project closely monitors both a company’s environmental and economic impacts and any internal structural changes which could be a red flag. 

One of LIFE COASE’s key achievements has been the Net Zero and Carbon Market Policy Dialogue which showcases real-life case studies of how the EU ETS improves the social and environmental lives of EU citizens. ‘One of the highlights is the policy dialogue which brings together experts and regulators worldwide to discuss how the development of carbon market cooperation and integration can help reach climate targets,’ adds Simone.  

‘Climate change is a transnational problem that can only be solved by working together. Climate policy will not work unless people accept it, and that only comes with good communication. Our job is to show that ETS revenues are used to compensate the most vulnerable people.’ 

LIFE COASE aligns to a number of EU Directives and legislation including: Emissions Trading Systems (ETS) Directive; 2030 Climate and Energy Framework; and European Green Deal.