ETS

EU's Emissions Trading Scheme

The EU Emissions Trading Scheme (EU ETS) is the world’s largest carbon market, covering more than 11 000 industrial and power plants in the EU-28, as well as in Iceland, Liechtenstein and Norway. The EU ETS covers about 40% of the EU’s greenhouse gas emissions.

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The EU ETS sets a limit on the amount of greenhouse gas emissions that can be emitted. Companies covered by the EU ETS receive or buy pollution permits – called EU allowances. One EU allowance allows for one tonne of CO2 to be emitted. The cap becomes slightly more stringent every year so that total emissions decline over time to minus 21% in 2020 and to minus 43% in 2030 from 2005 levels.

The ETS aims to help the EU achieve its emissions goals more cost-effectively and to catalyze investments in energy efficiency and renewable technologies. Despite being hailed as the flagship of European climate policy, the EU ETS has failed to deliver on these objectives. A weak reduction target and the massive use of international offsets have led to the build up of and enormous surplus of emission allowances. Therefore, the price for allowances has dropped so much that it no longer drives change. The reforms that have been passed (see the Market Stability Reserve) are not enough to fix the ETS.

EU decision makers are currently discussing ETS reforms for the period 2021-2030.

Read more about what already happened here

Trialogue

Negotiations between the European Commission, Council and Parliament start now that both the European Parliament and the Council have their positions. 

CAN Europe calls for more ambition

Absent reforms that go well beyond what has been proposed so far, companies can delay or cancel investments in cleaner and more efficient production. The sectors that cause almost half of the EU´s greenhouse gas emissions could continue polluting at business-as-usual levels for the next 10 years or longer. This risks a lock-in of carbon intensive infrastructure for years to come, making Europe’s climate goal more time-consuming and costly to achieve.

Last but not least, even if the reforms were to be bold and swift we will need other strong policies, such as for renewable energy and energy efficiency, and binding bioenergy sustainability criteria, see Why a price on carbon cannot fix everything.

Learn more

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CAN Europe Position on Essential ETS Reforms for post-2020

CAN Europe ETS reform position for post-2020 contains detailed recommendations. Read More

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Outcome of the European Plenary Vote of the ETS Reform

In terms of ambition, the results of the vote on 15.2.2017 is a clear betrayal of the Paris Agreement. Read More

Summary of the Environment Council agreement on the ETS reform

The Council position goes further than the European Parliament’s, but it still falls dramatically short of aligning the ETS with the Paris Agreement. Read more

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Why a price on carbon cannot fix everything

Some market fundamentalists make that a simple price on carbon (ie an ETS) can fix everything. This is simply wrong, has been proven wrong by many studies and it will remain wrong no matter how often this myth is repeated. Read More 

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Carbon leakage: industry subsidies, windfall profits instead of climate action

The success of the ETS revision hinges on its ability to make the polluter pay, rather than paying the polluter. Handing out free pollution permits contradicts the EU Treaty principle that polluters should pay. Read More 

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ETS Market Stability Reserve

The Market Stability Reserve (MSR) temporarily removes soem of the ETS surplus from the market. Read More

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Useful ETS Resources

Here you find a range of useful external ETS resources. Read More

 

Contact

Klaus

Klaus Röhrig in Brussels
EU Climate & Energy Policy Coordinator
klaus /at/ caneurope.org
+32 2893 0839

CAROLINE

Caroline Westblom in Brussels
EU Climate & Energy Policy Coordinator
caroline /at/ caneurope.org
+32 2894 4674 

ZANNA

Zanna Vanrenterghem in Brussels
EU Climate & Energy Policy Officer
zanna /at/ caneurope.org
+32 2893 0839

Latest Publications on Emissions Trading Scheme

  • Letter to Selected Ministers of the EU Environment Council: the reformed ETS Directive and establishment of a Just Transition Fund

    This letter is addressed to Environment Ministers and Permanent Representatives of Poland, Romania, Czech Republic, Slovakia, Slovenia, Croatia, Estonia, Latvia and Lithuania and Bulgaria Dear Environment Ministers, As the ETS revision process closes to an end, we would like to bring to your attention, the crucial issue of establishing a Just Transition Fund in order to support local economies and especially workers and their families in regions where lignite and coal mining activity is expected to decline in the coming decade.
  • Letter to ETS Rapporteurs: Establishment of the Just Transition Fund and end of coal subsidies (art. 10c)

    Dear Rapporteur/Shadow Rapporteur, As the ETS revision process closes to an end, we would like to bring to your attention to important differences between the decision of the European Parliament and the “general approach” agreed between the Environment Ministers in terms of EU ETS Funds. The eligibility criteria for investments under an article 10c derogation and the establishment of a Just Transition Fund. Both issues concern lower income Member States and are crucial for their alignment with EU’s ambitious decarbonization objectives.
  • Letter to EU Environment Council: exclusion of coal investments through ETS funds and support establishment of Just Transition Fund

    Dear Environment Minister, Ahead of the upcoming trilogue meeting on the revision of EU’s Emission Trading System (ETS), the undersigned, representing 30 networks and organizations representing citizens from across Europe, would like to urge you to ensure that the funding mechanisms dedicated to help lower-income Member States transform their energy systems (article 10c and the Modernization Fund) are robust and well-designed to truly support the development of renewable energy and energy savings instead of subsidizing coal plants.
  • Briefing on energy efficiency and Emissions Trading Scheme

    As the European Parliament and the Council of the European Union enter the phase of intense negotiations on the Clean Energy for All Europeans package, it is important to underscore that a higher energy efficiency target will help the EU in reducing its greenhouse gas emissions and thus also in implementing its commitments under the Paris Agreement. Therefore, increasing the energy efficiency target should be welcomed as an opportunity to revise the EU's inadequate climate target and further strengthen the relevant tools, such as the Emissions Trading System (ETS).
See All: Emissions Trading Scheme