Functioning of the ETS and the Flexible Mechanisms

15-03-2011

In 2003, the EU established a ‘cap & trade’ emissions trading system (EU ETS) for greenhouse gas (GHG) emissions of large industrial sources such as power plants, refineries and steel works. Since 2005, covered installations need a tradable allowance for each tonne of GHG emission. To ensure a reduction of -71% in 2050 compared to 2005 the cap is constantly reduced. The briefing explains the basic functioning of the EU ETS and how emission reduction projects outside the EU, so called Flexible Mechanisms, can be used for compliance under the EU ETS.

In 2003, the EU established a ‘cap & trade’ emissions trading system (EU ETS) for greenhouse gas (GHG) emissions of large industrial sources such as power plants, refineries and steel works. Since 2005, covered installations need a tradable allowance for each tonne of GHG emission. To ensure a reduction of -71% in 2050 compared to 2005 the cap is constantly reduced. The briefing explains the basic functioning of the EU ETS and how emission reduction projects outside the EU, so called Flexible Mechanisms, can be used for compliance under the EU ETS.

Autor externo

Martin Cames, Felix Chr. Matthes and Sean Healy (Öko-Institut)