The Role of the EU ETS as a Global Benchmark

The EU Emissions Trading System (ETS) remains the primary global benchmark for compliance carbon markets due to its sustained liquidity and significant trading volume. It is the largest and longest-standing market, having operated since 2005, with hundreds of thousands of tons traded daily, primarily driven by power-generating companies which have compliance obligations. As Europe transitions towards decarbonization, the challenge of balancing industry competitiveness while enforcing emissions reductions has heightened. The EU ETS is expected to undergo significant changes as industrial sectors take on a larger role in price formation, similar to a relay race where the baton is passed from power generation to industrial users.