In a basic sense the ETS has worked. It has set a cap on half of Europe’s carbon emissions, which were previously unregulated, and the companies covered by the scheme are no longer free to pollute. Carbon has a price and this influences the economics of burning fossil fuels.
For example, burning coal creates more carbon pollution than burning gas, so coal plant operators need more permits. The higher the price of the permits, the more expensive it is to use coal rather than gas. Power companies choosing how to generate electricity therefore have an extra cost associated with the more polluting options, so they’ll choose gas over coal more of the time.
Putting precise numbers on how far the ETS has worked in practice is difficult, as it means estimating what the level of pollution would have been if the ETS was not in place. It is likely, however, that in its first few years, the scheme was responsible for turning an anticipated increase in emissions into a decline of 2.5-5%. One in-depth study analysed background emissions, economic trends and weather patterns, and concluded that between 2005 and 2007 the ETS reduced emissions by 120-300m tonnes, with a best guess of 210m tonnes across Europe.