Since 2005, the EU Emissions Trading System (EU ETS) has been pivotal in reducing the continent's carbon footprint by 4%, making it the first and largest carbon market globally. With over 10,000 entities from power, heating, steel, and aviation sectors, responsible for 40% of EU's emissions, the EU ETS embodies the 'polluter pays' principle, where companies buy or sell carbon credits—each equal to one ton of CO2—based on their emissions.
However, the system wasn't perfect. Heavy industries enjoyed free allowances, undermining the incentive to reduce emissions, as selling surplus credits wasn't financially rewarding. Recognizing this, the EU has proposed significant reforms: ending free quotas, expanding market scope, and establishing a new market for road transport and heating by 2026.
With the goal to slash GHG emissions by 55% by 2030 and achieve climate neutrality by 2050, the EU ETS reform signals a robust commitment to a sustainable future. It's a complex system, but the message is clear: reduce emissions, or pay the price. #EUEmissionsTrading #Sustainability #ClimateAction
