The European Commission has revised its Emissions Trading System in a way that addresses the weakness that has plagued it since its inception, the concurrent fixed supply of permits and variable demand for them which resulted in permit prices too low to incentivise cleaner production. Under the revised system to commence at the start of next year, there will be a market stability reserve which takes 24% of surplus inventory out of the market each year between 2019 and 2023, and then 12% afterwards. Fewer permits in circulation will further raise prices, which have already increased by 200% over the past year to €13/tonne (US$15.40/tonne) in anticipation of the revision, with some projections being a price of €20/tonne (US$23.67/tone) in 2019 and €25/tonne (US$29.59/tonne) in 2020. At such prices coal-fired power plants, and to some extent gas-fired plants, will face an even more difficult challenge to remain profitable, or, where there is no alternative power generation, electricity prices will rise. Other emissions-intensive industries such as steel and cement making will also be strongly affected by the revision. Though it will be challenging for these industries, a higher carbon price is something that many industries have called for to incentivise lower carbon production and generation, and it will be highly interesting to see the effect on innovation over the years to come.