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European Emissions Trading Scheme

The European Emissions Trading Scheme (EU ETS), also known as the European Union Emissions Trading System, is a cornerstone of the European Union’s policy to combat climate change and a key tool for reducing industrial greenhouse gas emissions cost-effectively. Launched in 2005, it is the first and largest international system for trading greenhouse gas emission allowances, covering more than 11,000 power stations and industrial plants in the 27 EU member states, as well as in Iceland, Norway, and Liechtenstein.

Under the EU ETS, a cap is set on the total amount of certain greenhouse gases that can be emitted by the factories, power plants, and other installations in the system. Within this cap, companies receive or buy emission allowances, which they can trade with one another as needed. The limit on the total number of allowances available ensures that they have a value.

Each year, every company must surrender enough allowances to cover all its emissions, otherwise heavy fines are imposed. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or it can sell them to another company that is short of allowances. The EU ETS is designed to create an economic incentive for companies to reduce their emissions by finding the most cost-effective ways to do so.

For more information about the European Emissions Trading Scheme, you can refer to the following websites:

1. The official European Commission website on EU ETS:
This webpage provides comprehensive coverage of the EU ETS including its history, how it works, the legal framework, and the latest updates on the system’s performance and reforms.

2. The International Carbon Action Partnership (ICAP) ETS Detailed Information:
ICAP offers a map with detailed information about various emissions trading systems around the world, including the EU ETS. You can click on the EU ETS section for specifics about the system’s design, scope, price, GHG coverage, and other relevant information.

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