EU Emission Trading System / European Union Emission Trading System, EU ETS

The EU emission trading is the first cross-border and world-wide emission trading scheme. It is also an EU climate policy instrument with the aim of reducing greenhouse gas emissions at the lowest possible economic cost. In this case, an emission reduction is enforced, but it is left to the market, in which way this specific reduction takes place or is achieved. It was put into effect in 2005 and includes some of the industries which cause pollution, such as the following industries: iron, steel smelting, coking plants, refineries and crackers, cement and lime producers, glass, ceramics and the brick industry, paper and cellulose production. These industries account for 45% of the EUs CO2 emissions. This system is based on the fact that for each ton of CO2 emitted the acquired companies have to buy a tradable certificate and there are only a limited number of new certificates allowed per year. Surplus certificates can be sold on the market, so CO2 saving measures are rewarded, while companies with high and rising CO2 emissions on the market have to buy papers. The system thus works according to the cap & trade principle - restrict and act. This should create an incentive to reduce harmful CO2 emissions. Since 2012, aviation has also been included.