The European Union – Leading the world in CO2 reduction

The European Union – Leading the world in CO<sub>2</sub> reduction
The European Union – Leading the world in CO<sub>2</sub> reduction

The European Union is targeting an 80% reduction in CO2 emissions by 2050. To drive CO2 emissions reductions, the EU has operated the largest emissions trading scheme in the world since 2005. The European Union Emissions Trading System (EU ETS) is now in its third phase, which will run to 2020, and involves allocating and auctioning CO2 permits to industry. These permits are used to off-set actual emissions, but can also be traded. For example, 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.

The “cap and trade” system involves an open market price for CO2, which has become a benchmark for the costs of emitting CO2. The European economic slowdown over the last decade or so reduced CO2 emissions below planned targets, resulting in a price slump in these traded CO2 permits since around 2011.

However, the imminent ending of the third phase of the EU ETS in 2020, and the commencement of a fourth phase where the overall emissions cap will be progressively reduced by 2.2% each year until 2030, has seen dramatically renewed interest in purchasing CO2 permits, as industry starts to face real and significant costs for CO2 emission. CO2 prices have consequently shot up from a low of around €5 per tonne in 2017, to over €20 per tonne today. These real costs are generating renewed interest from industry in CO2 abatement technologies. The Calix Process is being developed in several different programs in the EU targeting CO2 emissions reduction.

Refinitiv (formerly known as the Financial and Risk business of Thomson Reuters)


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The European Union – Leading the world in CO<sub>2</sub> reduction


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