A patchwork of emissions trading systems (ETSs) currently operate in several jurisdictions, including the EU, Switzerland, South Korea and several US states and Canadian provinces.

In this paper, the authors develop a model to assess the market stability reserve, a key feature of reforming the European Union’s emissions trading system (EU ETS). Reforms to the EU ETS have been made in the face of a significant, prolonged downturn in the allowance price.