The European Union (EU) Emissions Trading System (EU ETS) has been described as a ‘grand policy experiment’ – the first-ever international system for emissions trading (Kruger and Pizer 2004). Adopted in 2003 and launched in 2005, the EU ETS covers some 11,000 industrial installations in Europe accounting for almost half of EU carbon dioxide (CO2) emissions. The EU has invested significant political capital in making this innovative cap-and-trade system work as the ‘flagship’ of its climate policy. The ultimate aim is to create a global carbon market by encouraging other major emitters, not least the USA and China, to follow suit.1 The learning effect of the EU ETS could thus be tremendous. However, the recent economic recession and slow progress on an international climate agreement for the post-2012 period have put EU climate policy and the EU ETS to the test.2 Some actors would like to see the EU ETS experiment fail, so as to provide stronger signals for low-carbon investment. Others argue that the system should be strengthened as key driver for decarbonization in Europe (van Renssen 2012). Whether the EU ETS stays on course, keeps afloat or sinks may have ramifications far beyond the EU itself. By exploring how the system actually works on the ground, we seek to shed light on whether the system has helped to start a process towards low-carbon corporate strategies.