EU ets is the basis of EU's principles for fighting climate change and its main tool to reduce greenhouse gas emissions. It is the world's first major carbon market and this is the largest.
EU emission trading system:
All EU Country Plus works in Iceland, Lettenstein and Norway (in the state of EEA-EFTA),
The fuel sector and the manufacturing industry limits emissions from about 10,000 structures, as well as aircraft operators operated between these countries,
The European Union's greenhouse covers about 40% of the gas emissions.
A 'cap and trade' system
In the cap, the operators buy or receive emission allowance, which they can do business with each other as needed. The total number of allowances available ensures that they have a value. Price encourages the decrease in signal emissions and encourages investment in innovative, low-carbon technology, where trading brings flexibility that ensures that emission is low where it costs to do.
Every year, an operator will have to surrender enough allowance to fully cover its emissions, otherwise heavy penalties are imposed. If an installation reduces its emissions, it can keep an additional allowance to meet its future needs or sell them to another operator with a lack of allowance.
The sale of the allowance at EU ETS is added to the budget of most member states. The allowances are also auctioned to provide supporting funds for innovation and energy changes in low-carbon technology.
Sectors and gas covered
EU ETs cover the following sectors and gases, focusing on emissions that can be measured, reporting and verified with high level accuracy:
- From carbon dioxide (CO2) to:
- The production of electricity and heat,
- Oil refinery, steel work, and iron, aluminum, metal, cement, lime, glass, ceramic, decoration, paper, cardboard, acid and bulk biochemical production, with energy-intensive industrial sector,
- Aviation within European Economic Area.
- Nitrous oxide (n2o)From nitric, adipic and glyoxilic acid and glyxal production.
- Perflurocarbon (PFCS)From the production of aluminum.
Participation in EU ETS is mandatory for companies in this sector, but:
- In some sectors, only the operator above a particular size is included,
- Some small installations can be excluded if governments take financial or other measures that reduce their emissions equal to equal amounts,
In the Aviation Sector, EU ETS will only apply to flights between the airports located in the European economic area until at least 31 December 2023. From January 1, 2019, aircraft operators need to monitor and report their emissions for European economic areas.
European Union Europe Trading System (EU ETS)The basis of EU's principles in combating climate change and an affordable way to reduce greenhouse gas emissions. It is the first and largest international system for the Green House Gas Emerging Allowance Trade, which covers more than 11,000 power stations and industrial factories, as well as airlines in 31 countries.
There are several original changes in the previous structure of the EU ETS Phase 4-in the system, e.g.
- Market Stability Reserve (MSR):MSR is a process that was introduced in 2015 and was launched in 2019 surplus of emission allowance that was created on the system and suppressed the prices of carbon. MSR automatically adjusts the supply of allowances sold in the market.
- Linar Reduction Factor (LRF):LRF is the annual reduction of caps of maximum allowed emissions. For the fourth step to achieve a more significant reduction in the greenhouse gas emission, the LRF has been increased from 1.74% to 2.2% per year.
- Free assignment and carbon leakage:Stage 4 free allowance is allocated to introduce the way. The arts at a significant risk of transferring their emissions beyond the EU (carbon leakage) will get a high ratio of free allowances. By updating the list of sectors every 5 years, the system to determine these industries will be more targeted and dynamic.
- Innovation and Modernization funds:Two new funds will be set up using revenue from the allowance auction. Innovation Fund will support the display of innovative technology and modernization fund will facilitate investment in the modernization of power sector and greater power systems and enhance power efficiency in 10 lower-income EU member states.
Ahmed sakr
Product compliance consultant
Complymarket ug (haftungsbeschrankt)
