European Union emissions trading system is a significant part of EU's climate policy. In fact, it is the world's largest multi-national emissions trading scheme.
Trading Period
Under European Union emissions trading system, over 10,000 industrial and energy installations that emit greenhouse gases are covered. European Union has introduced a Trading Period system under which emission allowances are provided to a government for a specified period of time.
First Trading Period ended in December, 2007. That period covered all greenhouse emissions beginning from January, 2007. Second Trading Period started from January, 2008 and will last till December, 2012.
Emission allowances
Emission allowances are provided by European Union to individual plant operators of member nations. Under European Union emissions trading system, carbon emission allowances can also be purchased from other installations, traders, and national governments. If an installations gets more allowances than what it requires, it may decide to sell it off to others who have a requirement for it.
Recent changes
In 2008, European Commission proposed several changes to the European Union emissions trading scheme. Under consideration are changes like introducing an auction system of providing emission allowances. Installations, traders, and government may not be provided free allowances and they may be required to buy it in an auction.
Even if the changes are accepted, it's unlikely to be brought into effect before January, 2013. Emission of nitrous oxide and perflurocarbons have also been proposed to be added to the list of greenhouse gases under European Union emissions trading system.
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