From January 2005 the EU Emission Trading Scheme came into effect. A significant part of the energy sector as well as energy-intensive industries, including the offshore sector, came under the scheme.
The scheme covers all 27 EU Member States and more than 10,000 stationary installations, of which around 380 are Danish. From 2012 the aviation sector will be included in the EU ETS scheme.
The objective of the scheme is to limit emissions of the greenhouse gas CO2 as cost-effectively as possible and with the greatest possible flexibility for the participating companies.
The scheme is an important common tool for fulfilling the EU’s commitment under the international Kyoto Protocol. This commitment means that on average for the period 2008-2012, EU Member States must emit 8% less CO2 than in 1990.
Who manages the scheme in Denmark?
The Danish Energy Agency manages the EU Emissions Trading Scheme in Denmark. The legal basis for the Danish Energy Agency’s management of the scheme is stipulated in the Danish CO2 Allowances Act and executive orders pursuant to this Act; in the Commission Regulation on registries pursuant to the EU Emission Trading Directive; and in the EU guidelines for monitoring and reporting (links to regulations are given under ‘Read more’).
General principles of the EU Emission Trading Scheme
For each installation, companies participating in the EU Emission Trading Scheme receive:
- a permit to emit CO2
- an approval of their carbon emissions monitoring plan
- an account in the Danish Emission Trading Agency, and
- in some cases, free allowances.
Each year the companies must:
- calculate their carbon emissions
- get verification for their carbon emissions from an independent body
- report their carbon emissions and
- surrender emission allowances in the Danish Emission Trading Agency corresponding to their calculated emissions.
Former Danish emission trading scheme
The EU Emission Trading Scheme replaces the former Danish emission trading scheme for electricity producers.
Facts on CO2 allowances
- One CO2 allowance equals the right to emit one tonne of CO2 within a specified period.
- Companies in the scheme must ‘pay’ for their carbon emissions, by CO2 allowances, or by CDM credits or JI credits from specific reduction-cutting projects in other countries.
- The CO2 allowances exist only electronically in the Danish Emission Trading Agency.
- CO2 allowances may be bought and sold in all EU Member States, irrespective of where in the EU they were issued.
- The price is determined by supply and demand.