EU Emissions Trading System (EU ETS)

Operational since 2005, the European Union Emissions Trading System (EU ETS) is the oldest system in force. It is a cornerstone instrument of the EU’s policy framework to combat climate change and reduce GHG emissions cost-effectively. The system covers some 10,000 stationary installations, in the energy and industry sectors, and airlines operating in the EU. This represents around 38% of the EU’s total emissions. In 2021, the EU ETS entered its fourth trading phase (2021-2030).

The legal framework of the EU ETS is established in Directive 2003/87/EC. Its latest revision, for Phase 4, had been completed in 2018. However, in light of the “European Green Deal”, in 2021 the European Commission proposed reforms to the EU ETS to align the system with the updated 2030 climate target of at least 55% net emission reductions compared to 1990 levels.