The European Union Emissions Trading Scheme (EU ETS)
So-called project-based « flexibility mechanisms » link Kyoto credits to the credits exchange market in Europe (EU-ETS)
Under the Kyoto Protocol, the European Union is committed to reduce its GHG emissions by 8% below its 1990 level by 2008-2012.
Early in 2005, the EU has developed the European Union Emissions Trading Scheme (EU ETS), the largest multi-national greenhouse gas emissions trading scheme in the world, to anticipate its Kyoto target.
Under this scheme, each participating country has drawn a National Allocation Plan (NAP)* setting yearly CO2 emissions quotas for 10.600 industrial installations across the EU Member States.
These quotas are materialized by allocations of “European Emission Allowances" (EUAs).
One EUA represents the right to emit 1 ton of CO2.
Industrial sites are allowed to restitute CERs/ERUs instead of EUAs (1 CER/ERU <-> 1 EUA) to a limit which varies country by country.
To comply with restrictive CO2 emission allowances, facilities can either:
- - reduce their emissions,
- - purchase EUAs from others facilities, or
- - acquire carbon credits from Kyoto flexibility mechanisms.
* for more information on NAP, go to http://ec.europa.eu/environment/climat/emission_plans.htm