This paper examines the history and functioning of the EU ETS to date, outlines the main elements of the phase IV reform, as proposed by the European Commission and as subsequently amended in the course of the legislative process, and their effects on the system. The paper ends by offering an outlook on the future of the EU ETS arguing that while the phase IV reform will reinforce the price delivery, some old challenges remain a concern and new issues are on the horizon. The full paper is available on the website of the University of Oxford.