Emissions trading is one of the so-called Kyoto mechanisms. Under the 1997 Kyoto Protocol, emissions trading was agreed upon as one of the key mechanisms for the sustainable reduction of greenhouse gas emissions and thus for combating climate change.
The European Union Emission Trading System (EU ETS) launched in 2005 forms the basis of the world’s largest carbon market to date. It is the central element of climate policy within the EU to achieve a cost-effective reduction in greenhouse gas emissions from energy and industrial plants and intra-European aviation on a market economy basis.
31 countries, all 28 EU countries plus Liechtenstein, Norway and Iceland, participate in the EU ETS. This means that emissions from more than 11,000 electricity generating and energy-intensive industrial plants and from all flights between participating Member States are covered by the EU ETS. This represents approximately 45% of total EU greenhouse gas emissions.