NIAS Europe Studies Brief

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NIAS Europe Studies Brief
European Union Emissions Trading Scheme: A Prototype for Global Emissions Reduction Mechanism

  Rubina Pradhan

About the Author

Dr Rubina Pradhan is currently an Assistant Professor at the Centre for Research in Social Sciences and  Education, JAIN (Deemed-to-be University), Bangalore. Her areas of interest are international organizations, humanitarian intervention, human rights, climate change, women's studies, and education.


NIAS Area Studies Brief No. 60

NIAS Europe Studies 26 July 2023

Climate change is one of the major environmental problems worldwide. Efforts have been made  to combat climate change and its impact through multiple global, regional, and local  mechanisms.* Emissions trading is one of the mechanisms incorporated in the 2005 Kyoto  Protocol. It is considered the best means or instrument for combating climate change while  making it cost-effective. Taking this as an inspiration and a guide, the European Union (EU) 

planned and developed an emissions trading scheme at the regional level. Recently, in 2021,  China launched the world’s largest emissions trading scheme, estimated to cover 1/7 of the  global carbon emissions from burning fossil fuels (Busch 2022). With China being considered  the largest emitter of greenhouse gases, the success of the planned Chinese emissions trading  scheme would largely determine the nature of climate change. 

Nevertheless, it is interesting and significant to study the very first measure implemented  regionally by the EU to measure its effectiveness for internationally viable options to curb  carbon emissions. EU’s emission trading scheme could be the model scheme that the world  requires, given that it is the first transboundary cap-and-trade system and has effectively  contributed to curbing carbon footprint. Covering approximately 11,000 installations (power  plants and factories, including airlines operating flights within Europe) across the region, the EU  Emissions Trading Scheme (ETS) is the biggest carbon market in the world (Creti and Joets  2017, and Abnett 2020). It covers 41 per cent of the total EU emissions (Abnett 2020). The  scheme is in place across the 27 EU member states, including Iceland, Norway, and  Liechtenstein, and is linked with the Swiss emissions trading scheme (LIFE ETX 2021). This  commitment from numerous countries to partake in the EU ETS makes the mechanism viable for expansion outside the region. 

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