The European Emissions Trading Scheme

The most important greenhouse gas emissions trading market is the EU ETS – The EU Emissions Trading System . Set up in 1995, the EU ETS covers now more than 10,000 polluting installations as well as airlines from 31 European countries – EU countries plus Norway, Iceland and Liechtenstein.

The EU ETS is the first and, at the same time, the largest GHG allowances trading system in the world, taking into account its volume. In the European climate change policy, the EU ETS is meant to be one of the cornerstones of a sustainable environment, covering almost half of greenhouse gas emissions from the EU.

Currently, we are in the fourth phase of the EU-ETS (2021–2030), regulated by Directive 2018/410 of the European Parliament and the Council of 14 March 2018, which amends Directive 2003/87/EC to improve and extend the EU Emissions Trading System. This directive applies to the 31 European countries participating in the EU ETS.

In this phase, major changes have been introduced. During this stage, the overall emissions cap has been progressively reduced, leading to a constant decrease in the allowances available on the market. Additionally, the share of auctioning for the allocation of allowances has significantly increased, at the expense of free allocations, which have become more limited and stricter, being reserved only for sectors at risk of carbon leakage. The Market Stability Reserve (MSR) has also been introduced, a mechanism designed to stabilize the market by automatically adjusting the supply of allowances based on market demand.

The Carbon Expert team remains at your service to help with your greenhouse emissions transactions within the European Emissions Trading Scheme since your business needs to optimally benefit from the CO2 trading and focus on its primary activities.

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We are here to offer you a broader perspective about the international carbon market and advise you towards those transactions types which best suit your needs.