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IET

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International Emissions Trading (Article 17 of the Kyoto Protocol) specifies that Annex I countries be allowed to trade assigned amount units (AAUs) with each other.

The objective and idea of emissions trading
Through emissions trading, an environmental (quantitative) target with a defined absolute upper load limit is to be achieved at minimum cost. Emitters will be assigned an emissions limit and receive permission to emit the specified emission quantity. The emitters receive certificates for the permitted amount of emissions. Emitters who want to emit amounts exceeding the assigned amount must obtain an additional certificate for each additional emissions unit. These can be purchased from other emitters who do not use up all the certificates assigned to them.

Through the trading mechanism, a market price for the emissions certificates is established which reflects the costs of emission reduction. Each emitter can decide whether it is cheaper to reduce emissions through reduction measures or to purchase certificates for the generated emissions.

Differentiation between International Emissions Trading and Emissions Trading within the EU

  1. INTERNATIONAL EMISSIONS TRADING (IET)
    The launch of international emission trading pursuant to Article 17 of the Kyoto Protocol is scheduled for the start of its first commitment period in 2008. IET exclusively facilitates commitment fulfilment by the parties to the Kyoto Protocol, i.e. the countries; however, it is at the discretion of the participating countries to authorise enterprises to participate in the trading. Thereby it is significant that the country, and not the enterprise, remains responsible for meeting the reduction commitment.
  2. EMISSIONS TRADING WITHIN THE EU
    In January 2005 the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced operation as the largest multi-country, multi-sector Greenhouse Gas emission trading scheme world. Now all 27 EU member countries are participating in it.

In the Phase I (2005-2007), the EU ETS includes some 12,000 installations, representing approximately 45% of EU CO2 emissions, covering energy activities (combustion installations with a rated thermal input exceeding 20 MW, mineral oil refineries, coke ovens), production and processing of ferrous metals, mineral industry (cement clinker, glass and ceramic bricks) and pulp, paper and board activities.

In Phase II (2008-2012), four non-EU members, Norway, Iceland, Liechtenstein, and Switzerland, are as well expected to join the EU ETS.