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What is the EU Emissions Trading System?

The Emissions Trading System (ETS) is the European Union’s flagship climate policy. It is intended to establish a legal limit (or “cap”) on carbon dioxide emissions (and more recently, those of other greenhouse gases) by making it expensive to pollute beyond this limit.

The basic idea is that it sets an overall legal limit on the CO2 emissions of over 11,000 power stations, factories and flights covered by the scheme, which operates in 31 countries and accounts for almost half of the EU’s greenhouse gas emissions. Each “installation” then receives permits to pollute, which are known as European Union Allowances (EUAs).

The ETS is supposed to provide incentives to companies who pollute less by allowing them to trade surplus permits with other companies. But the cap has been so generous that permits have been over-abundant and their price has collapsed. It has failed to make any substantial dent in the EU's greenhouse gas emissions, while returning billions of euros to big polluters in the form of unearned profits.

Corporate Europe Observatory argues that the ETS is unreformable and should be scrapped. For more resources, see:




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Stop ISDS campaign 2019

The European Parliament voted on the reform of the EU Emissions Trading System (ETS) on 15 February, agreeing to weak annual climate targets and massive new handouts to polluters for another decade.

Subsidies raised through the Emissions Trading System, the EU’s flagship policy to reduce climate change, could be the key to ensuring that two new coal-fired power stations are built in Greece, according to a recent report in The Guardian newspaper. Wait - what!?

The International Civil Aviation Organization is expected to agree a new climate deal at its current assembly meeting. But its promise of “carbon neutral” flying through voluntary carbon offsetting is delusive, posing new threats to the environment and communities.

A new report on carbon market reform has kicked off debate on the issue in the European Parliament. It promises new loopholes for the oil industry and other polluters.

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