What is the EU ETS Directive?
The EU ETS is a cornerstone of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively. It is the world’s first major carbon market and remains the biggest one.
Who does EU ETS apply to?
It was launched in 2005 to fight global warming and is a major pillar of EU energy policy. As of 2013, the EU ETS covers more than 11,000 factories, power stations, and other installations with a net heat excess of 20 MW in 31 countries—all 27 EU member states plus Iceland, Norway, Liechtenstein and United Kingdom.
How does EU ETS work?
The EU Emissions Trading System (ETS) works on the principle of ‘cap-and-trade’. It sets an absolute limit or ‘cap’ on the total amount of certain greenhouse gases that can be emitted each year by the entities covered by the system. This cap is reduced over time so that total emissions fall.
When did EU ETS start?
2005
The EU ETS started in 2005 and operates in phases. The first phase, from 2005 to 2007, was a pilot to get the system up and running (18). The second phase covered the Kyoto Protocol commitment period, 2008 to 2012. Finally, the third, currently ongoing phase started in 2013 and will last until 2020.
What is EU ETS aviation?
Under the EU ETS, all airlines operating flights within the European Economic Area (EEA) (i.e. the EU member states plus Iceland, Liechtenstein and Norway) are required to monitor, report and verify their emissions, and to surrender allowances against those emissions.
What are EU ETS allowances?
The EU ETS follows a “cap-and-trade” approach: the EU sets a cap on how much greenhouse gas pollution can be emitted each year, and companies need to hold European Emission Allowance (EUA) for every tonne of CO2 they emit within one calendar year. The fine is 100 euros per excess tonne.
How are EU ETS allowances allocated?
Auctioning is the default method for allocating emission allowances to companies participating in the EU emissions trading system (EU ETS). Over the current trading period (2013–2020), 57% of the total amount of allowances will be auctioned, while the remaining allowances are available for free allocation.
Does EU ETS include aviation?
The EU ETS will cover any aircraft operator, whether EU- or foreign-based, operating international flights on routes to, from or between EU airports. All airlines will thus be treated equally. Very light aircraft will not be covered.
What are allowances in cap and trade?
Under EPA’s cap and trade programs, allowances are allocated to regulated sources under an overall emissions budget that caps total emissions across all sources combined. Each allowance represents an authorization to emit one ton of emissions per allowance held in a compliance period.
What are free allowances ETS?
In the EU ETS, free allowance allocation is used to safeguard the competitiveness of the regulated industries and to avoid carbon leakage. In Phase I and II, most allowances were given for free. Sectors at risk of carbon leakage are identified based on carbon and trade intensity.
What does the revised EU ETS mean for You?
As informed, the revised EU ETS will focus on large ships — above 5,000 gross tonnage — regardless of the flag they fly.
What does the EU ETS proposal mean for the shipping sector?
The proposal builds on the provisions in place for other EU ETS sectors as well as the existing EU Monitoring, Reporting and Verification (EU MRV) System for shipping, which tracks CO 2 emissions from ships calling at all EU ports.
What does the EU’s proposed maritime emissions trading scheme mean for You?
Under the proposal, the EU ETS would cover around two thirds of maritime transport emissions — 90 million tonnes CO 2 — and result in a price signal that incentivises improvements in energy efficiency and low-carbon solutions and reduces the price difference between alternative fuels and traditional maritime fuels.
What does the EU ship emissions extension mean for You?
The extension will include all emissions from ships calling at an EU port for voyages within the EU as well as 50% of the emissions from voyages starting or ending outside of the EU as well as emissions that occur when ships are at berth in EU ports.