The EU ETS has proved that putting a price on carbon and trading in it can work.Emissions from installations in the scheme are falling as intended – by around 5% compared to the beginning of phase 3 (2013) (see 2015 figures).
In 2020, emissions from sectors covered by the system will be 21% lower than in 2005.
In 2030, under the Commission's proposal, they would be 43% lower.
Reports on EU's progress in cutting emissions Set up in 2005, the EU ETS is the world's first and biggest international emissions trading system, accounting for over three-quarters of international carbon trading.
The EU ETS is also inspiring the development of emissions trading in other countries and regions.
Such choices are likely to be determined by relative costs.
In this way, emissions are reduced wherever it is most cost-effective to do so. The first trading period ran for three years to the end of 2007 and was a 'learning by doing' phase to prepare for the crucial second trading period.
They can also buy limited amounts of international credits from emission-saving projects around the world.
The limit on the total number of allowances available ensures that they have a value.
In the first and second trading period under the scheme, Member States had to draw up national allocation plans (NAPs) which determine their total level of ETS emissions and how many emission allowances each installation in their country receives.