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Brussels, 21 December 2010

Emissions Trading: Statement by Commissioner for Climate Action Connie Hedegaard on regulatory oversight of the EU carbon market

"The European carbon market is a relatively young market which has grown rapidly during its first six years of operation, both in size and sophistication. With a climate crisis and an economic crisis, the world more than ever before needs cost-effective means of reducing greenhouse gas emissions. It is therefore important that the market can continue to expand and safely be relied upon to give an undistorted carbon price signal to investors and decision-makers in boardrooms across the EU.

Over the last years, the market has reached a size which makes it a potential target of fraudulent practices. Therefore, as the market matures and grows further, it is critical that it continues to be subject to appropriate and effective regulatory oversight."


Today's Communication is the first step in a work stream that may lead to a legislative proposal in this field in 2011. It takes stock of the level of oversight in the European carbon market. It also describes ongoing developments in the field of energy markets and financial markets with a bearing on the carbon market and lists the options that are available to safeguard the continued integrity of the growing market. It concludes that the lion's share of the carbon market is subject to appropriate oversight, but that more may be needed in the spot market.

As a next step, the Commission will examine in greater detail the structure of the carbon market, the level of market oversight and the available options (incl. the classification of allowances as a financial instrument). An internet-based stakeholder consultation will be conducted in the first half of 2011, the results of which will feed into a thorough impact assessment. This work will inform the decision on whether to come forward with a legislative proposal.

Market participants and other stakeholders are encouraged to engage in this process and support the Commission in identifying robust solutions to guarantee the further development of the European carbon market.

Information on the continued work on carbon market oversight will be posted on the internet site of DG Climate Action when available.


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