The EU Emissions Trading System (ETS) will need to undergo significant changes on the path towards climate neutrality by 2050 and net-negative emissions thereafter. As the current system approaches its so-called 'endgame,' with a shrinking cap and the possibility of new sectors being included, fresh policy questions are emerging that require careful attention.

This project supports the German Environment Agency (UBA) in developing strategic options for the structural evolution of the EU ETS post-2030. Its results will feed into the European Commission's 2026 review of the ETS and inform Germany's position in upcoming negotiations on ETS reform.

The project addresses several key challenges: how to maintain price stability and market liquidity as the supply of allowances declines; how to integrate carbon dioxide removal technologies without undermining incentives for emissions reductions; and how to extend carbon pricing to sectors not currently covered, particularly waste and agriculture.

The work is structured into five core content work packages:

• ETS Endgame Scenarios (WP1): Develops a quantitative assessment of how different reform options impact market functioning and liquidity as the ETS cap approaches zero.
• Carbon Capture and Waste (WP2): Analyses the potential inclusion of municipal waste incineration in the ETS and the implications for carbon capture and utilisation (CCU).
• Emissions Trading in Agriculture (WP3): Explores carbon pricing options for the agriculture and LULUCF sectors, including a potential agricultural emissions trading scheme.
• Integration of Carbon Dioxide Removals (WP4): Examines how CDR technologies with long-term storage could be integrated into the ETS.
• Ad-hoc Policy Analysis (WP5): Provides flexible capacity to respond to emerging policy developments affecting the ETS.

Ecologic Institute leads the overall project and takes primary responsibility for WP3 and WP4. Ecologic also contributes to WP1 and WP5 and coordinates the synthesis of results across all work packages.