Today is Friday, 28 June 2024.
A lot is said about the European Union Emissions Trading System (EU ETS) introduced in 2005.
What is the EU ETS after all?
It is the main tool for the European Union reach climate neutrality by 2050. It works on a system of allowances, each allowance representing 1 tonne of CO2. Each year, companies surrender allowances related to their emissions and allowances can also be both in auctions. And every year, the total allowances per sector is reduced, leading to a slow sectorial decarbonization, driving overall emissions down.
That is why Carbon Credit Markets has been alerting that EU ETS will zero in the coming years, around 2038 as indicated during COP28.
Besides that, the proceeds from the auctions are used to fund investments and innovation across the European Union.
Until 2024, EU ETS covered large industry, fossil-based electricity generation (and aviation partially).
Since 2005, annual emissions have fallen by 47%, with the reduction expected to reach 62% by 2030.
Carbon Border Adjustment Mechanism (CBAM) will be gradually enforced on imported cement, iron & steel, aluminium, fertilizers and hydrogen.
By the way, have you seen the default values for product embedded emissions for CBAM purposes?
And from 2027 onwards a new emissions trading system (ETS2) will focus on the green transition of road transport, buildings (thermal protection) and small industry, in parallel with the Social Climate Fund with EUR 86.7 billion, which will be at the center of green transition of the European Union, focusing on European citizens and social impacts.
Click at the image below for a short video (in English) showing all that.
