The paper contributes to the debate on the European Union (EU) Emission Trading Scheme (ETS) effectiveness. Main focus of the article is to explain the dominant factors that influence the ETS implementation process, identify weaknesses and suggest some exemplary modifications. The article offers an in-depth theoretical and empirical review of a complex environmental issue by addressing relations between private, public, national and supranational stakeholders. We systematically focus on four main ETS challenging scopes, namely: (i) lobbying pressure and carbon permits over supply; (ii) political justification of energy non-sustainable projects; (iii) intense sovereignty and authority disputes between states, supranational regimes and their international linkage to other cap-and-trade systems; and (iv) the outcome orientation and adequacy of the enforcing ETS mechanism. The literature review and empirical results revealed some important diametric concepts that may present an obstacle for the EU ETS effectiveness. The main research finding is that common EU climate policies can only be effective by harmonised implementation of the EU ETS and the Effort Sharing Decision.
