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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