EU – Emissions Trading System (ETS)

The Euro­pean Union Emis­sions Trad­ing Sys­tem (EU ETS), also known as the Euro­pean Union Emis­sions Trad­ing Scheme, was the first, large green­house gas emis­sions trad­ing scheme in the world, and remains the biggest. Launched in 2005 to com­bat cli­mate change, it is a major pil­lar of the EU’s cli­mate pol­icy.  The EU ETS cov­ers more than 13,000 fac­to­ries, power sta­tions, and other instal­la­tions with a net heat excess of 20 MW in 31 countries—all 28 EU mem­ber states plus Ice­land, Nor­way, and Liecht­en­stein. The instal­la­tions reg­u­lated by the EU ETS are col­lec­tively respon­si­ble for close to half of the EU’s CO2 emis­sions and 40% of its total green­house gas emissions.

Under the ‘cap and trade’ prin­ci­ple, a cap is set on the total amount of green­house gases that can be emit­ted by all par­tic­i­pat­ing instal­la­tions. ‘Allowances’ for emis­sions are then auc­tioned off or allo­cated for free, and can sub­se­quently be traded. Instal­la­tions must mon­i­tor and report their CO2 emis­sions, ensur­ing they hand in enough allowances to the author­i­ties to cover their emis­sions. If an installation’s emis­sions exceed what is per­mit­ted by its allowances, it must then pur­chase allowances from oth­ers. Con­versely, if an instal­la­tion has per­formed well at reduc­ing its emis­sions, it can sell its left­over cred­its. This allows the sys­tem to find the most cost-effective ways of reduc­ing emis­sions with­out sig­nif­i­cant gov­ern­ment intervention.

The scheme has been divided into a num­ber of “trad­ing peri­ods”. The first ETS trad­ing period lasted three years, from Jan­u­ary 2005 to Decem­ber 2007. The sec­ond trad­ing period ran from Jan­u­ary 2008 until Decem­ber 2012, coin­cid­ing with the first com­mit­ment period of the Kyoto Pro­to­col. The third trad­ing period began in Jan­u­ary 2013 and will span until Decem­ber 2020. The pro­posed caps for 2020 rep­re­sents a 21% reduc­tion of green­house gases com­pared to 2005, when the EU ETS was first imple­mented.

 

In the ETS we pleased to offer trad­ing for fol­low­ing environmental products:

Euro­pean Union Allowances (EUAs)  EUAs are allowances that are issued by EU mem­ber states. EUAs are allo­cated free of charge, auc­tioned or sold to mar­ket par­tic­i­pants in the EU ETS.

European Union Aviation Allowances (EUAAs) EUAAs are suitable with EUAs, but only for aviation industry use.

Cer­ti­fied Emis­sion Reduc­tions (CERs)  CERs are issued for emis­sion reduc­tions from CDM projects within the frame­work of the Kyoto Pro­to­col. CERs can be bought at dif­fer­ent project stages:

  • Pri­mary CERs: no guar­an­teed deliv­ery as CERs are not issued yet
  • Sec­ondary CERs: with guar­an­teed delivery

Emis­sion Reduc­tion Units (ERUs)  ERUs are Kyoto Pro­to­col units that are gen­er­ated for emis­sion reduc­tions or emis­sion removals from JI projects car­ried out in indus­tri­al­ized states.

Ver­i­fied Emis­sion Reduc­tions (VERs) We also trade VERs in the vol­un­tary car­bon mar­ket and car­bon cer­tifi­cates from other emis­sions trad­ing schemes.

 

 

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