Expanding the EU Emissions Trading System (EU ETS) as an important step towards global emission reductions and a sustainable future for the entire planet

Abstract

The article examines the European Emissions Trading System, its development and expansion. The features of the “cap and trade” principle of the emissions trading system, which ensures the achievement of emission reductions in the EU, are illustrated. The main regulatory provisions governing the functioning of the emissions trading system in the EU and related to the procedure for selling permits at auctions, distributing permits between countries, free distribution of permits, use of funds from the sale of permits, and implementation of ETS legislation are analyzed.

The purpose of the article is to: analyze the prospects for the development of the EU emissions trading system and identify key factors that can contribute to its improvement, in particular, taking into account new global environmental challenges and changes in international trade. The key principles under which the European Union Emissions Trading System (ETS) operates are identified. It is noted that the effectiveness of the European Emissions Trading System (EU ETS) depends on several factors, including market mechanisms, regulatory support and overall climate goals. The main directions and prospects for the development of the EU Emissions Trading System (EU ETS) to achieve the climate goals of the "EU Green Deal" are outlined. The article emphasizes that one of the most important innovations for international emissions trading in the EU is the Carbon Border Adjustment Mechanism (CBAM). Its purpose is to prevent the so-called "carbon leakage" when companies move their production to countries with less stringent climate standards in order to avoid high emissions costs in the EU. CBAM assigns a carbon price to imported products from outside the EU (e.g. steel, cement, fertilisers, etc.) that are produced with high greenhouse gas emissions. The main phases of the development of the EU ETS are highlighted).