 Shifting concerns for the EU ETS are carbon prices becoming too high. In 2005 the European Union set up an emissions trading system. From that year onwards big energy intensive firms in the EU buy, trade and save emissions allowances that permit them to emit CO2, the major greenhouse gas. The system turned out not to be very effective. By the end of 2017 prices were below 10 euros per tonne of CO2 and experts agreed that such prices are insufficient to engage in serious emission reduction activities. Concerned citizens and experts worried that the emission trading system had turned out a failure. Then in 2018 prices picked up. They started a steady upwards climb and by January 2022 got close to 100 euros. Something dramatic had happened. Should we now be concerned that prices may become too high, raising costs enough to drive energy intensive firms out of business. Two obvious reasons stand out to explain the fate of the CO2 prices for the last five years. First, the European Commission became much more ambitious in the fight against climate change. They tightened the market in various steps now proposing that the supply of allowances will be fully phased out by 2040, only 18 years from now. Most of the current industry plants will still be in operation and will require huge costs to be transformed so as to become carbon neutral. The CO2 price reflects these costs. Second, the European Commission set up the Market Stability Reserve, a vault that stores emission allowances currently not used. Now if too many allowances are saved by the firms, next year fewer allowances are offered for sale to the market. Allowances that are not sold are instead stored in this vault and later they are in fact cancelled. Effectively, the European Commission tightened the market even further. Added to these two policy changes, in 2021 gas prices climbed up. Power plants started to use the cheaper coal which has higher CO2 emissions and the increased demand for emissions allowances combined with the reduced supply further fuelled the steady CO2 price rise in 2021. In the paper that this video clip is about, we discuss a mechanism that reinforces the above three. The emissions price for allowances tends to increase over time with the interest rate. Thus, if the interest rates were high, the emissions price would increase steeply and demand for emissions allowances decrease rapidly over time. However, interest rates are currently very low and hence the emissions price becomes flatter over time. As a consequence, also the emissions path over time becomes flatter and this leads to an ever increase in cancelling of allowances in the Market Stability Reserve. So how does that work? It is all about a strong positive feedback in the emissions trading system. In a standard allowances market, supply of emissions allowances is fixed and demand decreases as the emissions prices rise. The price then settles at the level at which demand equals supply. In the EU emission trading system, the new style, higher CO2 prices cause firms to cut back on their emissions and effectively save more emissions allowances for the future. In turn, more allowances enter the vault, that is the Market Stability Reserve, and are cancelled. Thus, supply of emissions allowances also decreases with the price. The price is no longer determined by overall supply and demand, but by some boundary conditions. The boundary condition is that the ETS forces the companies to become carbon neutral in 2040. The high price we see nowadays reflects the huge effort we need to make.