Guide to the EU Emissions Trading Scheme (EU ETS) and its impact on business.
Content last updated: November 2013.
The EU ETS - also known as the European Union Emissions Trading Scheme - puts a cap on the carbon dioxide (CO2) emitted by business and creates a market and price for carbon allowances. It covers 45% of EU emissions, including energy intensive sectors and approximately 12,000 installations.
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Phase II of the EU ETS ran from from 2008-2012 (the commitment period of the Kyoto Protocol). During this phase, every EU member state:
Phase III started in 2013 and run until 2020. The biggest changes in Phase III are:
Publication date: 2004 - 2008
Information in these reports was correct at the time of publication
Publication date: 01/06/2008
This report analyses amendments to the EU emissions trading scheme (EU ETS) proposed by the European Commission on the 23 January 2008 and their implications for business.
It concludes that the proposals are a bold and significant step in the right direction that correct weaknesses in the current scheme and provide the level of certainty that business and investors have been calling for.
Publication date: 11/01/2008
This report combines data on how business costs would be affected by carbon costs with analysis of the effect on prices and international trade in order to identify the small group of activities for which competitiveness is an issue for the environment, as well as for business, and to identify potential responses.
Publication date: 21/05/2007
This report analyses the implications for the Phase II carbon market (and the resulting industrial abatement incentives) and the wider lessons to be learned from the allocation process.
Publication date: 01/06/2006
This report, based on collaborative research with Climate Strategies, examines the workings of the EU ETS to date and offers analysis and recommendations on its future development.
The study identifies seven key challenges to overcome for the second phase of the EU ETS and sets out the Carbon Trust's own conclusions and recommendations for the future of the EU ETS as an instrument that can both help business deliver emission reductions as efficiently as possible, and also protect and ultimately enhance business competitiveness in a CO2-constrained world.
Publication date: 30/06/2004
This report explores in depth the implications of the EU ETS for industrial competitiveness in the UK and the wider EU. It presents our analysis of combined insights from economic modelling and a stakeholder interview programme.
The EU ETS scheme started in 2005 in order to help the EU meet its targets under the Kyoto Protocol (8% reduction in greenhouse gas emissions from 1990 levels).
The scheme is the world's largest carbon-trading scheme. It provides an incentive for installations to reduce their carbon emissions, because they can then sell their surplus allowances.
Installations are included in the scheme on the basis of their Carbon Dioxide (CO2) emitting activities. Industries that are covered include:
More information on the EU ETS can be found on the DECC website.
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