The European Union Emissions Trading System (EU ETS), was the first large greenhouse gas emissions trading scheme in the world, and remains the biggest.

1. eu ets
The European Union Emissions Trading System (EU ETS), was the first multi-state greenhouse
gas emissions trading scheme in the world, and remains by far the biggest. It was launched in
2005 to combat climate change and is a major pillar of EU climate policy.
As of 2013, the EU ETS covers more than 11,000 factories, power stations, and other installations
with a net heat excess of 20 MW in 31 countries-all 28 EU member states plus Iceland, Norway,
and Liechtenstein. The installations regulated by the EU ETS were, in 2008, collectively
responsible for close to half of the EU's anthropogenic emissions of CO2 and 40% of its total
greenhouse gas emissions. It is based on a cap and trade system, modelled on the US SO2
emissions trading programme, that facilitates the most cost effective emission reductions by
allowing those with the lowest abatement cost to help the others via trade.
Installations must account for their verified emissions on a yearly basis by submitting enough EU
allowances to cover every tonne of verified emissions. The majority of industrial installations
receive some free allowances each year to reduce the impact of the EU ETS but the free
allocation will decrease over time in line with Europe's internationally agreed targets. The cap and
trade system allows installations to buy any additional allowances they require and also sell any
surplus allowances thereby financially incentivising, for the first time, companies to make
decisions that benefit the climate.