Climate change is a global problem. Under the Kyoto Protocol, by 2012 the European Union (EU) member states must reduce emissions of greenhouse gases - such as CO2 - by 8 per cent below 1990 levels. The UK has agreed to reduce its emissions by 12.5 per cent by 2012.
Emissions trading - such as the EU Emissions Trading System (EU ETS) - is a key policy measure being used to help the EU (and UK) to meet their emissions reduction targets. The EU ETS can affect businesses from energy-intensive sectors such as the energy industry and certain manufacturers. If your business is covered by the EU ETS, you must meet targets by either cutting your business' emissions or by trading allowances.
Large organisations not covered by the EU ETS were covered by another scheme called the CRC Energy Efficiency Scheme (CRC), which closed in 2019.
This guide explains how the EU ETS works, which businesses are affected and how they can comply.