Emissions trading European Emissions Trading Scheme ETS Aim

Emissions trading - European Emissions Trading Scheme (ETS) Aim: Control pollution through a market system market: scarce goods are traded creation of scarcity: limit (cap) on the emission of a pollutant "cap-and-trade" system Approach: - companies are given allowances (credits), i. e. the right to emit a certain amount of a pollutant - total amount of allowances must not exceed the cap - companies that need more credits must buy them from others buyer is fined for polluting seller is rewarded for reducing emissions © DS

Option: Cap may be lowered over time reduction of total pollution set by political insititutions Institutions who don't need any credits can also buy them (e. g. Greenpeace) intention: less credits on the market companies can't pollute so much Instrument of "free market environmentalism"! Start: allowances are auctioned or given away free (grandfathering) basis: allocation plan (set up by the government) ETS: National Allocation Plan (NAP) set up for each member state must be approved by the European Commission Allowances for Germany are traded at the "Leipziger Strombörse" © DS

1 st phase (2005 - 2007): covers only CO 2 emissions 45% of all EU emissions) from: - energy installations (e. g. power plants, refineries) - production and processing of ferrous metals - mineral industries (cement, glass, ceramic bricks) - pulp and paper industries 2 nd phase (2008 - 2012): intended to cover: - all greenhouse gases - aviation sector © DS