What is the EU ETS?
The EU ETS is a greenhouse gas (ghg) “cap and trade” system seen by European governments as the primary instrument “to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner” (Directive 2003/87/EC). At present, National Allocation Plans (NAPs) are set and emission permits given to larger emitters on the basis of past emissions (grandfathering). The value of these permits can be realized by companies by passing through their value in increased prices to consumers or by selling them to other emitters. Around 45% of CO2 emissions (some 35% of all ghgs) are covered by the existing ETS. The system may be characterized as complex, only partially harmonized between EU states, and incomplete. For instance the 1990 emission baselines are still to be agreed. The size of the market is predicted to rise from tens of billions to trillions of euros per year. It could be argued that the very complexity of the system is a barrier to democratic participatio
