EU Emissions trading system—outline
EU Emissions trading system—outline

The following Environment guidance note provides comprehensive and up to date legal information covering:

  • EU Emissions trading system—outline
  • Brexit impact
  • How does the EU ETS work?
  • Registries
  • Benchmarking
  • Market oversight

The EU emissions trading system (EU ETS) covers approximately 11,000 power stations and industrial plants in 31 countries (the 28 EU member states plus Iceland, Liechtenstein and Norway). It covers CO2 emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. Nitrous oxide emissions from certain processes are also covered. Between them, the installations currently in the scheme account for almost half of the EU's CO2 emissions and 45% of its total greenhouse gas (GHG) emissions. Airlines were added to the scheme in January 2012.

Brexit impact

As of exit day (31 January 2020), the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this content.

For further guidance, see Practice Note: Brexit—impact on environmental law and News Analysis: Brexit Bulletin—key updates, research tips and resources.

How does the EU ETS work?

Launched in 2005, the EU ETS works on the cap and trade principle. This means there is a limit on the total amount of certain GHGs that can be emitted by the factories, power plants and other installations