In the European Union, ETS was made in order to ensure that a drastic cut on the emission of greenhouse gas (GHG) is achieved in a cost effective and market measurable manner in compliance with the overall greenhouse gas emission reduction made by the European Union. In 2005, EU ETS was designed and it should allow the decarbonisation of the European economy in a bid to attain climate neutrality by the year 2050 and its intercessions which are a reduction in net emissions by 55 percent in the year 2030 compared to the levels
What is the EU Emissions Trading System (EU ETS)
EU ETS is the recently developed form of cap and trade compliance, in which large emitters of greenhouse gasses must have permits that are equal to the amount of gas they produce.
It addresses major industries like those sported by;
- Electricity and heat generation,
- Industrial manufacturing,
- Aviation,
- Maritime transport (since 2024).
The system is extended to all EU member states in addition to Iceland, Liechtenstein, and Norway that are connected with the Switzerland carbon market.
In this plan, the EU gives a yearly ceiling on the overall emissions that reduces gradually with time prompting companies to lower the size of their carbon footprint. Companies who need to satisfy their obligation can purchase, trade, or sell emission permits—the financial incentive to reduce emission.
The Climate Targets of the EU ETS
The aim towards achieving Climate Neutrality in the Year 2050
The ultimate objective of the EU ETS would be that the EU is in position to fulfill climate-neutrality in 2050, i.e. it should become net-zero of greenhouse gas emissions. That is quite an ambitious target that can align with the European Green Deal and the European Climate Law that will see Europe transform into a low-carbon economy, in a sustainable way.
The 2030 Emissions Reduction Target
The EU is trying to decrease its net emissions by at least 55 per cent in 2030 relative to that of 1990 as an interim measure. This target will be legally binding against the European climate law and further supported by changes to the policies of EU ETS.
This higher ambition was implemented in the ETS Directive in 2023, where the cap was tightened further, so that emissions are cut by 62 percent in 2030 compared to 2005. This ought to be accompanied by a broader scope to maritime emissions as well as a reduction of free allowances to companies unless the company can show progress towards significant decarbonization.
How Does the EU ETS Help Achieve These Targets?
Reducing the Cap of Emission Allowances
The amount of cost-free allowances issued reduces after every year making the allowances scarce and placing pressure on allowance prices. This is a market signal that allows industries to innovate in a bid to cut on emissions.
Trading and Flexibility
Power to trade allowances among companies helps them to strike the right balance between economics and the environment. The institutions that decrease emissions more quickly are able to sell the redundant allowances whilst those who are struggling to reduce are able to acquire allowances to cover their emissions as they shift.
Monitoring and Compliance
Companies will need to flag and report their emission on a regular basis and trade the corresponding allowances. If it is not followed properly, severe fines are
Comments
20 responses to “What is the Goal of the EU Emissions Trading System?”
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Honestly, who wouldn’t want to play Monopoly with their carbon emissions? Just a few permits here and there, and voilà—climate neutrality by 2050! 😂🤑
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Just what we needed, another complicated scheme to play with numbers while the planet cooks. ETS: because nothing says “green” like trading paper instead of actually reducing emissions, right? 😂💼
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Seems like the EU’s got the whole “cap and trade” thing down to a fine art, eh? Just what we need—a system where you can pay to pollute! 😂💸
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Isn’t it just delightful how the EU thinks playing Monopoly with emissions permits will save the planet? 🎲💨 Who knew that trading paper could feel so green?
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Oh, brilliant! So now we can slather a nice green label on our carbon emissions while patting ourselves on the back for trading permits like it’s a game of Monopoly. Who knew saving the planet came with such a fancy price tag? 💸🌍
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Blimey, who knew turning the economy green could be such a high-stakes game of Monopoly? 🎲 Let’s just hope no one forgets to pass ‘Go’ and collect their emissions permits! 😏
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So, we’re all just going to play Monopoly with our emissions now, are we? 🎲 Nothing like a good old cap-and-trade game to save the planet while keeping a straight face! 😂
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Honestly, if the EU emissions trading system was any more ambitious, it’d be trying to negotiate peace in the Middle East while riding a unicycle. 🚴♂️💼 Good luck with that “climate neutrality by 2050” gig, mate!
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Seems like the EU’s got a plan to save the planet while letting companies play Monopoly with their emissions. Who knew saving the world could be so… profitable? 😏💰
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Blimey, the EU’s got a fancy new trading system to save the planet—because clearly, buying and selling permits is a lot easier than just, you know, not polluting at all. 🎩💼 Who knew saving the Earth required a market!
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Looks like the EU’s got a real master plan here—cutting emissions while trading permits like it’s a game of poker! 🃏 Who knew saving the planet could be so… lucrative?
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Typical EU, giving us a lovely game of “who can trade their way out of guilt” while we all wait for 2050 like it’s the next season of our favorite soap opera. 🎭
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Isn’t it charming how the EU’s emissions trading system makes reducing greenhouse gases sound like a fancy game of Monopoly? Just remember, lads, the only thing trading here is not just carbon credits, but our hopes for a cleaner future! 😂
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If only we could just buy a few permits and call it a day, eh? Who knew saving the planet would be this complicated? 😏💸
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Isn’t it just delightful how our beloved EU has turned carbon emissions into a stock market game? Who knew saving the planet could come with a side of trading permits? 🙄💸
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So, we’re supposed to believe that by trading fancy little permits, we’ll magically fix the planet? Sounds like a delightful game of Monopoly, but with more guilt and less fun! 🎩🌍
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Isn’t it adorable how the EU thinks they can trade their way out of climate change? I mean, who wouldn’t want to play Monopoly with carbon credits while the planet slowly sizzles away? 🤷♂️💸
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Funny how we’re trading emissions like they’re Pokémon cards now, eh? 🌍💼 Just wait till the next big summit where they’ll surely aim for “climate neutrality” while enjoying their first-class flights! 😂
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Seems like the EU is trying to sell us a “get out of jail free” card for emissions—except it costs a fortune and comes with a side of bureaucratic red tape. Typical, right? 😏🌍
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If we’re really aiming for climate neutrality by 2050, perhaps we should start by making sure the air isn’t as thick as a London fog, eh? Not that I’m suggesting we rush it—Rome wasn’t built in a day, after all, but it sure could have used a good emissions trading system! 😉
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