THE EUROPEAN UNION – LEADING THE WORLD IN CO2 REDUCTION
The European Union is targeting an 80% reduction in CO2 emissions by 2050. To help drive CO2 emissions reductions, in 2005 the EU introduced and began operating the largest emissions trading scheme in the world. The European Union Emissions Trading Scheme (EU ETS) involves a process of allocating and auctioning tradable permits that can be used to offset actual emissions. The scheme is currently in its third phase which will run until 2020. If a particular CO2 emitter has taken steps to reduce emissions and ends up with a surplus of permits, they can sell them to another emitter who has not taken such steps, and needs the permits due to having high emissions. The “cap and trade” system involves an open market price for CO2, which has become a benchmark for the costs of emitting CO2 in Europe.