The European Union Emissions Trading Scheme (EU-ETS)

The EU-ETS is the world's largest cap-and-trade system, regulating approximately half of the EU's CO2 emissions across 30 countries. While it has evolved through three trading periods to include more greenhouse gases and airline emissions, the system has suffered from severe over-allocation of allowances, leading to price collapses and a surplus of approximately 2 billion allowances by the end of 2012.

• The EU-ETS covers more than 11,000 installations across 30 countries, including all 27 EU member states, Iceland, Norway, and Liechtenstein, with a 2020 emissions cap set at 21% below 2005 levels.
• The scheme has operated in three phases: the first from 2005–2007, the second from 2008-2012 (aligning with the first Kyoto commitment period), and the third from 2013-2020.
• The EU-ETS is the largest buyer of offsets globally, allowing up to 50% of EU-wide reductions between 2008-2020 to be met via approximately 1.6 billion CDM and JI credits, though certain project types like forestry and HFC-23 are restricted or banned.
• The third trading phase introduced centralized allocation by an EU authority, increased the share of auctioned allowances to over 60%, and expanded coverage to include airline emissions (as of early 2012) and gases such as nitrous oxide and perfluorocarbons.
• Severe over-allocation in the first two periods caused price collapses, leaving the system oversupplied by about 2 billion allowances by the end of 2012; proposed remedies include back-loading, permanent retirement of allowances, or raising reduction caps.

APA

CMW (2012). The European Union Emissions Trading Scheme (EU-ETS). Carbon Market Watch. https://carbonmarketwatch.org/2012/11/09/eu-ets/

Chicago

CMW. The European Union Emissions Trading Scheme (EU-ETS). Carbon Market Watch, 2012. https://carbonmarketwatch.org/2012/11/09/eu-ets/.

Wikipedia

{{cite report |last1=CMW |title=The European Union Emissions Trading Scheme (EU-ETS) |publisher=Carbon Market Watch |date=9 November 2012 |url=https://carbonmarketwatch.org/2012/11/09/eu-ets/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cmw2012european, author = {CMW}, title = {{The European Union Emissions Trading Scheme (EU-ETS)}}, institution = {Carbon Market Watch}, year = {2012}, month = nov, url = {https://carbonmarketwatch.org/2012/11/09/eu-ets/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }