THE EU ETS: FROM CORNERSTONE TO CATALYST - THE ROLE OF CARBON PRICING IN

How good is the ETS at driving innovation investment? Although the effects of the ETS on low-carbon technology innovation can be difficult to isolate, there is evidence that the creation of the EU ETS generated a boost to certain incremental clean energy innovation.14 One study finds that patenting in sectors covered by the ETS increased by up to 10% compared to sectors not covered by the ETS.15 N. [...] A powerful catalyst to accelerate the decarbonisation of the power sector As the price of allowances increased in the last few years, the ETS proved to be particularly effective at reducing the use of coal to generate electricity in the EU. [...] 70) 27 European Commission (2020), Report on the functioning of the European carbon market T H E E U E T S F R O M C O R N E R S T O N E T O C A T A L Y S T : T H E R O L E O F C A R B O N P R I C I N G I N 1 0 D R I V I N G G R E E N I N N O V A T I O N . [...] 33 European Commission (2021), Factsheet on the Innovation Fund 34 Carbon Market Watch (2021), A new hope – recommendations for the EU emissions trading system review T H E E U E T S F R O M C O R N E R S T O N E T O C A T A L Y S T : T H E R O L E O F C A R B O N P R I C I N G I N 1 1 D R I V I N G G R E E N I N N O V A T I O N . [...] As the use of the revenues is left to the discretion of the member state, the European Commission could propose that at least 10% of revenues are allocated to R&D.