Emissions Trading for Industries

The EU Emissions Trading System (ETS) represents a cornerstone of the EU’s policy to combat climate change and reduce greenhouse gas emissions cost-effectively. The system operates on a ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. Companies receive or buy emission allowances which they can trade with one another as needed. At the end of september each year, companies must surrender enough allowances to cover all their emissions, otherwise heavy fines are imposed.