It's mostly a disincentive. At least a chunk of the money goes to member countries to help transition away from fossil fuel use. There are a variety of rules a

It's mostly a disincentive. At least a chunk of the money goes to member countries to help transition away from fossil fuel use. There are a variety of rules and mechanisms to ensure the money that is distributed gets spent that way. How effective those rules end up being in real life I'm unsure. The World Wildlife Fund is one of many publications that's skeptical of the efficacy of how the money is spent: https://www.wwf.eu/?8275441/ETS-revenues-report-2022 https://www.wwf.eu/?8275441/ETS-revenues-report-2022