This was previously known as the EU Emissions Trading Scheme. This section will give you all the information you need about the EU Emissions Trading System (EU ETS), including how to make an application for a greenhouse gas emissions permit.
Throughout all of our EU ETS pages we may direct you to other websites, including those of the Department of Energy and Climate Change (DECC) and the European Commission. A full list of links to other websites is available.
For information on how aviation is included in the EU ETS, please read our aviation pages:
What is the EU ETS?
The EU ETS is one of the policies introduced across the European Union (EU) to help it meet its greenhouse gas emissions reduction target under the Kyoto Protocol. The EU has to make an eight per cent reduction on 1990 levels by the first Kyoto Protocol commitment period (2008 - 2012).
The EU ETS commenced in 2005 and is the largest multi-country, multi-sector greenhouse gas emissions trading system in the world. It includes around 11,000 installations (excluding aviation) accounting for about 45 per cent of EU carbon dioxide (CO2) emissions.
Each year the UK reports its analysis of UK annual emissions and places them in context by looking at the EU-wide picture:
How the EU ETS works
The EU ETS is cost-effective and operates by the allocation and trading of greenhouse gas emissions allowances throughout the EU - one allowance represents one tonne of carbon dioxide equivalent.
An overall limit, or 'cap', is set by Member State's Governments on the total amount of emissions allowed from all the installations covered by the scheme. The allowances are then distributed to the installations in the scheme.
At the end of each year, operators are required to ensure they have enough allowances to cover their installation's emissions. They have the flexibility to buy additional allowances (on top of their free allocation), or to sell any surplus allowances generated from reducing their emissions.
These options create a flexible compliance regime for operators and also ensures emissions are effectively capped across the EU.
The scheme currently has two operating phases:
- Phase I ran from 1 January 2005 to 31 December 2007 and was a 'learning by doing phase';
- Phase II runs from 1 January 2008 to 31 December 2012 and includes revised monitoring and reporting rules, more stringent emissions caps and additional combustion sources;
- Phase III, which will run from 1 January 2013 to 31 December 2020, brings major changes including, harmonised allocation methodologies and additional greenhouse gases and emission sources.
Installations covered by the EU ETS are those which carry out activities listed in Annex I of the EU ETS Directive. These include energy activities, production and processing of ferrous metals, mineral industries and pulp and paper industries.
What the EU ETS means for your business
The EU ETS Directive requires all installations carrying out activities listed in Annex I to hold a greenhouse gas emissions permit. The conditions of the permit will require installations to monitor and report emissions in accordance with the Commission's guidelines for monitoring and reporting.
Each year emissions data must be verified, and the equivalent number of allowances surrendered. All transactions and surrendering of allowances take place on a national registry.
We have produced a guidance document to help UK operators comply with their Greenhouse Gas Emissions Permit. This guidance is aimed at operators included in the EU ETS under Phase II (excluding aviation):
What to do next
- E-mailus for submission of completed applications
- E-mailus for registry matters
- Emailus for further help
