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The Chemicals Sector and EU Emissions Trading Scheme after 2012


29 July 2009

Significant changes will be made to the EU Emissions Trading Scheme (the EU ETS) for Phase III (2013-2020) and subsequent phases. Here we look at some of the key issues affecting the chemicals sector.  

The policy context

The EU ETS, which began on 1 January 2005, is currently the largest carbon-trading system in the world. Emissions of greenhouse gases from activities within the scope of the EU ETS are constrained by means of a “cap and trade” system. Operators of installations that fall within the EU ETS must obtain enough emissions allowances to match their emissions of certain greenhouse gases.

The first phase of the EU ETS ran from 2005 to 2007, and the current Phase II runs from 2008 to 2012, co-inciding with the first term of the Kyoto Protocol, the international agreement on reducing emissions of greenhouse gases. The emission reduction commitments made in the Kyoto Protocol expire at the end of 2012, and international negotiations are under way to reach a new agreement.

In this context, the EU has set an overall environmental target of a 20% reduction in greenhouse gas emissions by 2020, or a 30% reduction if an international agreement is reached under which other developed countries commit to comparable efforts. The changes to the EU ETS for Phase III, and subsequent phases, are part of the EU’s climate and energy package, which is designed to help achieve these targets.

If a new international agreement on climate change is reached at the end of this year, then further changes to the EU ETS are likely to be both necessary and desirable. In this case, the Commission will be required to prepare a new legislative proposal amending the current EU ETS Directive.

Please click through to a PDF of a summary entitled, "The Chemicals Sector and The EU Emissions Trading Scheme after 2012 ", for a more detailed overview of the issues affecting the chemicals sector.


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