EU emissions trading system (EU ETS)

The Emissions Trading System (ETS) is a market-based tool for reducing greenhouse gases that allows emissions rights to be traded. In the EU Emissions Trading System (EU ETS), companies from industry and aviation receive emission certificates that determine their permitted emissions. These certificates can be traded to create incentives for emissions reductions. If companies exceed their emission limits, they must pay fines or purchase additional certificates. The EU ETS plays a key role in the EU climate strategy and promotes investments in green technologies.

The EU Emissions Trading System (EU ETS) represents an important market-based tool for combating climate change and was introduced in 2005 as the central climate protection instrument of the European Union. It aims to significantly reduce greenhouse gas emissions in the energy, industry, and aviation sectors. Based on the "cap-and-trade" principle, the system sets a cap on the annual emissions that may be emitted by approved installations. This cap is continually lowered to ensure a more efficient reduction of emissions.

Companies receive emissions certificates that define their maximum emissions. If they exceed these limits, they must either purchase additional certificates or face financial consequences. This creates an incentive for emissions reduction and promotes investments in environmentally friendly technologies. Approximately 40 to 45% of greenhouse gas emissions in the EU fall under the EU ETS, which includes about 11,000 stationary installations and airlines.

As part of the European Green Deal, the EU ETS has been reformed with the aim of increasing reductions to at least 55% by 2030 compared to 1990 levels. Additionally, starting in 2027, a second, independent trading system is planned to regulate emissions from buildings and transport. Despite occasional criticism of price fluctuations and the impacts on certain industries, the EU ETS has proven effective and remains a central component of European climate policy and the goal of achieving climate neutrality by 2050.