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First imagined at the end of the ‘90s, the ETS was born out of a long debate on the introduction of a carbon tax. The idea was to put a price on every single emission, so that whoever emits pays for it.
The goal is forcing the installations under it – now about 11,000 – to decarbonise. These are mostly big plants in the power sector and heavy industries (like refineries, cement plants, steel, aluminium and chemicals) across all Member states, Norway, Iceland and Liechtenstein. The UK was covered too, until Brexit happened.
Since ETS was implemented in 2005, however, there have already been four phases with different legislations and tools. In particular, too many European Emission Allowances (EUA) were created during the second phase by a very generous free allocation after the economic crisis in 2008 – which soon became highly problematic.
“Not only were steel makers getting some for free, but they were getting so many allowances that they could sell them,” explains Wijnand Stoefs, policy officer dealing with EU ETS, international shipping and carbon dioxide removal at NGO Carbon Market Watch, which is specialised…
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