European Union Emissions Trading System

This bachelor's thesis examines the European Union Emissions Trading System (EU ETS) in the context of the extensive reform associated with the Fit for 55 legislative package. The aim of the thesis is to assess whether the new legal framework creates an effective mechanism for achieving the climate goals of the European Union without disproportionately disrupting the competitiveness of the European economy. The first part outlines the historical development, the operational principles of the carbon market, and the core reforms included in the Fit for 55 package. Subsequent sections evaluate the system from both environmental and economic perspectives. The results show that the tightening of rules successfully leads to a reduction in emissions and to an effective decoupling of economic growth from greenhouse gas emissions. On the other hand, the system places increased demands on the European economy, threatening primarily its export competitiveness. In the conclusion of the thesis, a proportionality test is applied to assess the proportionality of the reformed system in relation to environmental objectives and economic concerns. The thesis concludes that the regulation is proportional. However, its success depends on the effective functioning of compensatory mechanisms, the minimization of bureaucratic burdens, and the flexibility of the legislator.