A bold package of reforms to the European Union emissions trading scheme is driving a carbon price rally and breathing new life into the once ailing cap-and-trade scheme, say analysts and traders.

The reforms, which phase in from 2019, are due to be signed off by member states by the end of February, having been approved by the EU Parliament on February 6. This means there will finally be some regulatory certainty for the EU ETS after two-and-a-half years of political wrangling. The reforms are