The European Union has set ambitious targets to limit greenhouse gases. But it will not be able to meet these targets without an effective market for trading carbon emissions. Simon Tilford argues that the Commission's proposals for reform of the EU's emissions trading scheme address many of its short-comings, but do not go far enough. He argues that Europe's carbon market needs robust and independent institutions to run and oversee it. Without these, it will fail to act as a model for the international bodies that will be needed to manage global emissions trading.

Simon Tilford is chief economist at the Centre for European Reform.