In 2005, the European Union introduced a market in carbon dioxide emissions for major emitting industries.
The scheme is based on the allocation of carbon emission allowances, called EU Allowances (EUAs), to specific industrial sectors through national allocation plans (NAPs) that cap the total level of emissions at levels which reduce over time. There are just over two billion allowances on issue, which are traded between emitters and other market participants on exchanges and via brokers [see
EUA market reports]. The first trial phase of the EU ETS covered the period 2005-2007, while the second phase coincides with the Kyoto Protocol’s first commitment period, from 2008 to 2012. A third phase will run from 2013 to 2020.
The EU ETS applies to 7,300 companies and 11,500 installations in sectors with high carbon dioxide emissions across the 27 nations of the EU. These include: energy utilities, oil refineries, iron and steel producers, the pulp and paper industry as well as producers of cement, glass, lime, brick and ceramics. Aviation and aluminium are to be included in future years. The scheme is regulated by the European Commission (EC).
What is the greenhouse effect?What are the greenhouse gases?What is the Kyoto Protocol?What is "emissions trading"?How does the EU Emissions Trading Scheme work?How are EU emission allowances bought and sold?What are the emissions caps of EU nations?