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Emissions Trading

A “green house gas trading system” whereby large carbon producers can buy and sell their quotas for CO2 emissions. EU Emissions Trading Scheme (EU ETS) The EU ETS is one of the policies introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases and combat the serious threat of climate change. The scheme commenced on 1 January 2005. The first phase runs from 2005-2007 and the second phase will run from 2008-2012 to coincide with the first Kyoto Commitment Period. Further five-year periods are expected subsequently. The scheme will work on a “Cap and Trade” basis. EU Member State governments are required to set an emission cap for all installations covered by the Scheme. Each installation is then allocated allowances for the particular commitment period in question. The number of allowances allocated to each installation for any given period, (the number of tradable allowances each installation will receive), will be set down in a document called the National Allocation Plan. Anyone who is not covered by the Scheme will be able to open an account on the registry and buy and sell allowances1. (See UK ETS for differences between the two).

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