What is meant by emissions trading?

Emissions trading is one of the Kyoto mechanisms and aims to regulate and limit the emissions of energy-intensive factories or companies in a market-based and sustainable manner. It was introduced in the European Union in January 2005. The aim is to reduce the emission of greenhouse gases and at the same time to steer towards climate-friendly technologies in order to protect the climate. A fundamental distinction is made between the mandatory emissions trading market and the voluntary emissions trading market.

In the mandatory emissions trading market, a state or the EU determines the total amount of greenhouse gas emissions that companies subject to emissions trading may emit per year. This limited quantity of emissions is issued to the companies in the form of tradable emission rights. The current plan is to reduce the permitted emission quantity by 1.74 percent annually.

The emission rights are also known as pollution rights or emission certificates. Each emission certificate entitles the company to emit one ton of greenhouse gas or CO2 equivalents. If a company emits more greenhouse gases than its limited number of pollution rights entitle it to, it must purchase additional emission certificates on the emissions trading market. However, if the plant operators implement CO2 reduction measures that lead to energy savings, you will end up with a surplus of emission allowances. You can sell these unused certificates on the mandatory emissions trading market. All companies subject to emissions trading must report their emissions each year and submit their certificate quantities to the German Emissions Trading Authority - DEHSt for short.

"In Germany, operators of around 1800 installations are currently participating in emissions trading. These are in particular all large combustion plants (with more than 20 megawatts of thermal capacity) and the larger plants in energy-intensive industries such as steelworks, refineries and cement works. Since 2013, other greenhouse gases and sectors in addition to CO2 have been included. Since 2012, air traffic, insofar as it affects EU airports, has also been included in emissions trading. However, the scope of application for air traffic is currently being revised. explains the Bundesministerium für Umwelt, Naturschutz und nukelare Sicherheit.

Source: Bundesministerium für Umwelt, Naturschutz und nukelare Sicherheit

 

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