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European Union Emission Trading scheme |
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European Union Emissions Trading Scheme or EU ETS can be regarded as world’s first biggest carbon dioxide emission trading system. Since year 2005 around 10,000 big industrial plants in EU need to purchase and sell carbon dioxide permits for emission of it into atmosphere.
This emission-trading scheme allows companies exceeding set carbon dioxide emission levels to purchase allowances from ‘greener’ companies. An emission cap is set for each plant as per a National Allocation Plan (NAP). The idea is to ensure that on the whole EU targets as specified under Kyoto protocol are reached. These above mentioned 10,000 energy-intensive companies in European Union represent around 40% of EU’s total emission of carbon dioxide. Prime industries covered under this unique scheme include following.
1. Power generation
2. Bricks
3. Iron & steel
4. Pottery
5. Glass
6. Cement
In order to attain minimization of economic costs arising from its Kyoto commitments (regarding containment of climate change) European Union nations have agreed in principle for the creation of an internal market aimed at allowing business companies to enter trading in carbon dioxide related pollution permits. A fine worth €40 is expressed for each excess tonne of carbon dioxide emitted. This fine was set to rise to €100 in year 2008. In the time period 2005-06, carbon price fluctuations have ranged between €8-30 a tonne. EU-ETS offers a much cheaper option to payment of fines for breaking set pollution limits for companies. Hence application of EU-ETS is thought to stimulate innovation and creation of business incentives for business enterprises, for reduction of carbon emissions. European nations at present benefit from a host of exemptions, some of which are mentioned below.
1. Member nations have the option of opting out selected plants from concerned system
2. In situations of "force majeure" like exceptionally low levels of winter temperature, added emissions allowances may be issued by concerned national authorities
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