The objective of this project is to assess and propose the design of an effective carbon pricing mechanism conducive to decarbonisation of the Energy Community Contracting Parties’ electricity sector in a cost-effective and socially acceptable way. The design should allow for transitory carbon pricing, by each Contracting Party (separately or as part of an Energy Community design) and prepare Contracting Parties for joining the EU ETS in the future. It should also include solutions for a targeted and fair reallocation of the funds obtained by the states, and minimize the impact on system adequacy and security of supply.