Emission Trading System (ETS)

The system introduced in 2005 by the EU works on the “cap-and-trade” principle whereby a maximum limit is established on the total permitted greenhouse gas emissions.

Cap-and-trade asks companies to cap, trade, sell and buy emissions allowances as needed.

→ CAP: a maximum limit is placed on the total greenhouse gas emissions allowed by participating companies, mainly in the energy and industrial production sectors. The objective is to reduce this limit over time to ensure an overall reduction in CO₂ emissions.

→ TRADE: companies and institutions can exchange carbon quotas, i.e. purchase them in the event of excess emissions or sell them if they manage to reduce the accumulation of CO₂ in the atmosphere.

If a part of the emissions is to be offset, an international market can be accessed through credit trading platforms.

The value of a carbon credit varies depending on the period of purchase and the market trend. Lately, costs have been slightly higher due to rising gas prices that have led companies to use other energy sources, renewable and fossil.

This method shows flexibility and provides incentives to reduce emissions where it is most cost-effective.