EU Proposal To Include Shipping In The Emissions Trading Scheme

What is the EU ETS?

The European Union Emissions Trading System (“EU ETS”) consists of a “cap and trade” system which caters for the trading of emission allowances in an attempt to combat climate change in an efficient and cost-effective manner. This market-based system sets an absolute cap on the total amount of greenhouse gases which can be emitted by certain regulated entities, each year. These entities purchase or receive¹ emissions allowances which can be subsequently traded with one another. At the end of a given year, the entities must surrender enough allowances to cover their emissions. Entities may elect to save any extra allowances for future needs or otherwise sell them to an entity which lacks allowances.