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.

website banner

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


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

CAN Europe Position on Essential ETS Reforms for post-2020

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

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

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 

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 

ETS Market Stability Reserve

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

Useful ETS Resources

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




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


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


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

Latest Publications on Emissions Trading Scheme

  • ETS Reform: what has happened so far

    EU decision makers are currently discussing how to reform its Emissions Trading Scheme for the period 2021-2030. Here is what has happened so far:
  • Summary of the Environment Council agreement on the ETS reform

    On Tuesday, 28 February 2017, the Environment Council agreed on a general approach on the revision of the EU Emission Trading Scheme (ETS). Although the agreement goes further in terms of ambition than the European Parliament’s position adopted on 15 February, it still falls dramatically short of delivering the reform needed to align the ETS with the Paris Agreement.
  • EU countries propose limited reform of EU climate policy

    EU Environment Ministers meeting in Brussels today have reached an agreement on the revision of the Emission Trading System (ETS) for the next decade. According to Climate Action Network (CAN) Europe, the outcome, while slightly better than expected, is far too weak to repair the broken scheme or align the EU’s planned emission reductions with the global temperature goals it committed to under the Paris Agreement.
  • Open letter to EU Environment Ministers on the revision of the EU ETS

    Dear Environment  Minister, Ahead of the Environment Council we, the undersigned, representing 32 networks and organizations from 30 countries, would like to urge you to ensure that the low-carbon 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. 
See All: Emissions Trading Scheme