What lies ahead for the EU ETS
The Fit-for-55 climate package (FF55) has reformed the EU Emissions Trading System (EU ETS). Most importantly, the linear reduction factor (LRF), determining how fast the cap is reduced over time, has been revised. If the new LRF is sustained after 2030, the cap will zero in 2039 instead of in 2058 (for more details, see section 2.1). This has led to an increase of the price of emission allowances which has significantly strengthened the incentives for emission reductions.