Before revision: The Emissions Trading Scheme of the European Union is a central instrument of EU's climate policy. Looking at the development of allowance prices shows that prices have been low for a long time and previous research indicates that a link to fundamental price drivers is hard to establish. Only recently, prices have started to increase. This new price development has received a lot of attention in political discussions in which it has been attributed to the recent reformof the EU ETS -- the strengthening of the Market Stability Reserve through cancellation.
After revision: The Emissions Trading Scheme (ETS) have started to rally from persistently low levels in previous years. Market observers attribute this development to the EU ETS -- the strengthening of the Market Stability Reserve through cancellation.