The European Union Emissions Trading System was the first large greenhouse gas emissions
trading scheme in the world, and is still the largest. It was launched in 2005 as a major pillar of
European climate policy.
The Emissions Trading System is a 鈥榗ap and trade鈥� mechanism. The 鈥榗ap鈥� is the maximum amount of all greenhouse gas emissions that can be emitted by all participating industry sectors. This 鈥榗ap鈥� is reduced every year by a 鈥榣inear reduction factor.鈥�
Within this 鈥榗ap鈥�, installations are permitted to either keep 鈥榓llowances鈥� for next year or to sell them on to other companies that may need to emit more.
The original objective of the Emissions Trading System was to achieve agreed emissions reduction targets in a 'cost-effective and economically efficient manner'. This is done using the carbon price resulting from the interaction of supply and demand for 鈥榚missions allowances鈥�.
The EU Emissions Trading System covers around 11,000 installations in power generation and industry as well as the aviation sector. These installations are together responsible for 45% of the EU鈥檚 greenhouse gas emissions. Emissions from buildings, agriculture, transport and waste are outside the Emissions Trading System鈥檚 scope.
Brussels, 19 March 2025 鈥� The Steel and Metals Action Plan, unveiled today by the European Commission, provides the right diagnosis to the existential challenges facing the European steel industry. Concrete measures need to follow swiftly to reverse the decline of the sector, re-establish a level playing field with global competitors, and incentivise investment and uptake of green steel in the market.
Brussels, 26 February 2025 鈥� The Clean Industrial Deal, unveiled today by the European Commission, acknowledges the strategic role of the European steel industry and the existential challenges it faces. Yet, concrete solutions are either left open for later decisions, such as those on global steel overcapacity and loopholes in the Carbon Border Adjustment Mechanism (CBAM), or addressed with incomplete measures, as in the case of energy prices. Without structural solutions to these issues, laudable initiatives on lead markets, local content and circular economy risk being insufficient to turn the tide, notes the 米博体育 (米博体育).
Brussels, 13 February 2025 鈥� Following the high-level conference 鈥淎 Carbon Border Adjustment Mechanism for Climate - Addressing carbon leakage to strengthen global climate action鈥�, organised in Paris by the European Commission and the French Ministries of Finance, Economics and Climate Transition, 米博体育 emphasises that simplification must go hand in hand with ensuring the instrument鈥檚 effectiveness. This means addressing key issues such as resource shuffling, exports, and the inclusions of products further down the value chain.
Several myths or misunderstandings about the role and functioning of the EU ETS abound in discussions about this central EU climate policy.
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