Consolidated text: Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading - (EU Emission Trading Scheme (EU ETS))

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Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading - (EU Emission Trading Scheme (EU ETS))

Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve

Regulation (EU) 2024/795 

Directive (EU) 2023/958 amending Directive 2003/87/EC as regards aviation’s contribution to the Union’s economy-wide emission reduction target and the appropriate implementation of a global market-based measure

Law passed

Amended

This Directive establishes a Community GHG emissions trading scheme from 2005, to enable the Community and the Member States to meet their Kyoto Protocol commitments. Directive 2004/101/EC reinforces the link between the EU's emission allowance trading scheme and the Kyoto Protocol by making the latter's 'project-based' mechanisms (Joint Implementation and the Clean Development Mechanism) compatible with the scheme. From 2005, all installations in the energy sector, iron and steel production and processing, the mineral industry, and the wood pulp, paper and board industry, and emitting the specific GHG associated with that activity, must possess a permit issued by the appropriate authorities. Each Member State must draw up a national plan indicating the allowances it intends to allocate for the relevant period and how it proposes to allocate them to each installation. The Directive also provides for flights that arrive or depart from a Member State's territory to be subject to the EU ETS (from 2012), measure that so far applies to intra-EU flights. Any operator failing to surrender the quantity of allowances commensurate with the emissions from his/her installation during the previous year will have to pay EUR100 (USD 125) per tCO2e and buy allowances for the excess emissions.

The 2003 Directive was amended by:
<ul>
<li><a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230301 mitigating carbon leakage risks; incentivising uptake of low-carbon technologies; reporting/verification of emissions from maritime transport; and reviewing the Market Stability Reserve.</li>
<li><a href=" target="_self"><ins>Regulation (EU) 2024/795</ins></a></li>
</ul>

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

Terrestrial means "of the earth" and relates to the risks to ecological system that includes all living organisms and their interactions within land-based environments, such as forests, grasslands, and deserts.

Actions or measures to adapt terrestrial systems to climate change.

Aligning the skills of the workforce with the requirements of the just transition.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

A ban is a legal action that prevents the sale or supply of a product or service, or that recalls a product from the market. Examples are bans on SF6, greenwashing, fossil fuel advertisement or single-use plastics.

Energy derived from biological compounds that are renewable due to their short life cycle within the carbon dioxide cycle.

Financial actors and resources that are primarily directed towards climate change mitigation, adaptation and compensation.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Air pollution involves harmful contaminants in the air, affecting both indoor and outdoor environments. It can lead to health issues like respiratory diseases and heart problems, and climate impacts such as global warming. Pollutants can damage plants, trees, habitats, and water bodies like rivers and lakes.

A commitment to balance GHG emissions with removal by a certain point in time, effectively reducing the net emissions to zero

Work that is productive and delivers a fair income, security in the workplace and social protection for all, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Activities that relate to the production of goods and services from forests.

Actions and measures to adapt and increase resilience of societies and the economy to climate change.

A financial institution that manages a country's currency and can promote climate-related initiatives through green monetary policy and other means.

This sector involves managing waste treatment, sanitation, pollution control and environmental cleanup.

People who are less able to respond to the effects of climate change due to having limited financial or physical assets

Electrical energy generated from mechanical devices driven by flowing fresh water.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

Coastal zone and marine-related actions and measures to adapt and increase resilience to climate change

Climate change impacts our society by disrupting the natural, economic and social systems we depend on. Physical hazards and underlying vulnerabilities can lead to increased resource competition for food and water, which can heighten the risk of conflict.

Dedicated pool of financial resources for climate-related projects.

This sector provides communication services, software development, and IT solutions.

This sector involves activities to move goods and people, alongside the storage of products.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

This sector involves the wholesale and retail selling of goods.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

Any substance with chemical properties that can cause physical harm to people or damage the environment, including ammonia, carbon monoxide, phosphine, chlorine, arsenic, cadmium, mercury, pesticides, dioxins, microplastics, benzene, asbestos, aflatoxins, fluoride, methanol, and toxins from marine sources.

Climate change can have a range of impacts on technological system. Extreme weather events can cause infrastructure failures like power outages or damage to roads and bridges, as well as the impacts from waste following natural disasters. Human activities also cause technological impacts, such as the risks posed by oil spillage and leaks.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Social protection systems consist of policies that help people manage social risks in order to prevent poverty and maintain decent incomes and living standards

Compulsory, required payments to the government that are levied more-or-less in proportion to the services provided. Fees and charges range from entrance fees to national parks, charges on land-based sewage discharge.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

Actions or measures to adapt freshwater, coastal and marine systems to climate change.

Zoning and spatial planning are both methods for guiding the distribution of people and activities in a space, and are regulatory restriction.

A potent, short-lived greehouse gas, largely released from livestock, fossil fuel extraction and waste management.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

Extreme weather refers to events where a weather variable exceeds (or falls below) a threshold. Meaning it is significantly different from the average or usual weather pattern.

Social inclusion is the process of improving the terms on which individuals and groups take part in society—improving the ability, opportunity, and dignity of those disadvantaged on the basis of their identity.

This sector involves activities that impart knowledge and skills to individuals, including formal schooling, vocational training and educational support.

Consolidated text: Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading - (EU Emission Trading Scheme (EU ETS))

Target

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance