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The European Emissions Trading System, known as the EU ETS, is one of the European Union's key tools for achieving its targets for reducing greenhouse gas emissions in the industrial and aviation sectors. This scheme, currently active in 31 EU countries, is based on Directive 2003/87/EC and aims to reduce emissions by 40% by 2030 compared to 2005 levels.
What is the ETS (Emissions) Market?
The ETS, or the market for CO2 emissions in Europe, is the European Union Emissions Trading System. This system regulates CO2 emissions in key sectors such as electricity, manufacturing and aviation. The ETS Directive outlines the rules for the allocation of emission allowances, both for consideration and free of charge, with the aim of stimulating emission reductions and promoting sustainability.
How the Emission Trading System (ETS) works
The 2013 ETS Directive requires electricity generation plants and carbon capture and storage facilities to source their needs through auctions. For manufacturing sectors, allowances are allocated free of charge based on activity and reference standards developed by the European Commission. Emission allowances, which represent one tonne of CO2 each, are allocated through public auctions.
Carbon Credits and Emission Allowances
Emission allowances set a maximum limit on permitted emissions, calculated on the basis of historical emissions from installations. These allowances can be traded on the market, incentivising emissions offsetting between companies. The free allocations are intended for manufacturing sectors, calculated on the basis of emissions from the most efficient installations.
Operators in the ETS
The EU ETS involves more than 10,000 installations in the electricity sector, manufacturing industry and airlines operating in participating countries. Industries such as power generation, steel, aluminum, cement, civil aviation, and others, are included in the system.
Cap and Trade Principle
The "Cap and Trade" principle sets an upper limit on permitted emissions, allowing companies to buy or sell allowances according to their needs. Companies must surrender an emission allowance annually for each tonne of CO2 emitted.
Penalties in the ETS
Administrative and financial penalties are provided for operators who do not comply with the rules of the system. These penalties also involve the surrender of unduly allocated allowances and the imposition of penalties for false or incomplete information.
The EU ETS in Italy
In Italy, more than 1,200 entities are involved in the EU ETS, responsible for 40% of national greenhouse gas emissions. The ETS Committee is the national authority responsible for the implementation of the system in Italy.
The EU ETS is a crucial tool for achieving the EU's emission reduction targets. With its quota allocation rules, public auctions and sanctions, the system aims to promote sustainability and limit the environmental impact of key sectors. With its implementation in 31 countries, the EU ETS continues to play a key role in the fight against climate change.