Emission trading


The EU Emission Trading Scheme is the principal market-based instrument in Europe designed to help EU Member States to comply with the commitments made under the Kyoto Protocol to limit or reduce their greenhouse gas emissions. The incorporation of the Emission Trading Directive (2003/87/EC) and its implementing measures into the EEA Agreement has enabled the EFTA States to participate in the scheme from 2008.

The EU Emission Trading Scheme (EU ETS) has been developed as a cap and trade system aiming to reduce greenhouse gas emissions among large emitters within Europe. It is the world's first and largest international emissions trading system. Its objective is to ensure that greenhouse gas emissions from the sectors covered are cut at least cost to the economy.

Allowances traded in the EU ETS are held in accounts in national electronic registries. All national registries are overseen by independent transaction logs at both EEA (Community Independent Transaction Log - CITL) and UN (International Transaction Log - ITL) levels. Each company with a commitment and any person interested in buying or selling allowances must open an account in a national registry. The CITL records the issuance, transfer, cancellation, retirement and banking of allowances that take place in the registry.

The current EU ETS covers energy-intensive activities which commonly generate high levels of CO2 emissions, including:

  • power stations and other combustion plants
  • oil refineries
  • coke ovens
  • iron and steel plants
  • factories making cement, glass, lime, brick, ceramics, pulp and paper.

The EU ETS is in its third phase (2013-2020). The scheme has been extended to cover further sectors and additional gases. From 2012, aviation activities have also been included in the EU ETS. The scheme has now been extended to cover further sectors as well as additional gases.

From 2012, aviation activities will be included in the EU ETS pursuant to Directive 2008/101/EC.

The EU ETS for the next trading period, as revised by Directive 2009/29/EC, will be strengthened and expanded. From 2013, its scope will be extended to include other sectors and greenhouse gases and the capture, transport and geological storage (CCS) of all greenhouse gas emissions will be covered.

Relevant links


Other EEA Institutions

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