1. Outline
This is a letter from Professor Piers Forster, Interim Chair of the CCC, to Minister Jones, Minister of State for Industry, in response to a request for advice on the UK ETS markets policy.
2. Key messages
The policy elements of the Auction Reserve Price (ARP), the Cost Containment Mechanism (CCM), and a Supply Adjustment Mechanism (SAM), if designed so that they work together effectively, could represent a good policy design to maintain stable and effective market conditions. That will help incentivise decarbonisation in the traded sectors. The Committee has several specific recommendations for how these policy elements can achieve this outcome.
