Emissions Trading

The introduction on January 1, 2005 of CO2 emissions rights trading in the European Union established a free market instrument with which the Kyoto objectives could be achieved and created a motivation for corporations to invest in climate-friendly technologies. In this case, it is not the individual countries who participate in trading, but rather the operators of firing plants with outputs of at least 20 MW.

Every company involved in emissions trading is allocated a certain number of emissions certificates. The company is allowed to emit one ton of carbon dioxide into the atmosphere for each certificate it has. If it emits more, then it is obliged to purchase additional certificates. Emissions trading leads to some companies reducing their CO2 output, which enables them to sell the certificates they have saved.