What is the connection between a fully functioning internal energy market and the Emissions Trading Scheme?
Without a competitive and European-wide electricity market, the emissions trading mechanism is hampered in its effectiveness. The present lack of effective competition goes a long way to explain why European electricity companies have increased their prices, which include the carbon price, whilst at the same time gratefully accepting free emissions permits. On the contrary, in a competitive market with adequate carbon prices, low emissions will become a real competitive advantage and demand for efficient power plants, renewable energies, or carbon capture and storage will increase, creating a market for these technologies.
