This is a European system for trading greenhouse gas emission allowances. It is part of the European Union climate action policies. It works by putting a limit, which is lowered over time, on the total greenhouse gases that can be emitted by:
- power stations, and
- other large-scale industrial activites.
These are known as installations and there are about 100 installations coming under the EU Emissions Trading System in Ireland.
Under the system, the installations they receive or buy emission allowances. They can trade these with other installations as needed. Each emissions allowance is for one tonne of CO2 equivalent.
Each year, an installation must have enough allowances to cover all of its emissions, or otherwise it is fined.