Under the Kyoto Protocol, European Union (EU) Member States (except Malta and Cyprus) have been assigned with a national amount of greenhouse gases (GHG) that they can emit during the period 2008-2012.
Through the EU emissions trading scheme (ETS) part of these so-called assigned amounts have been further allocated to European installations in energy-intensive sectors. Slightly less than half of EU CO2 emissions are covered by the ETS.
The management of the remaining part of Member States’ assigned amount is generally carried out by governments through carbon/energy taxation, subsidies, voluntary agreements, green/ white certificates, etc. Target sectors/groups are, e.g., built environment, decentralised green energy production, and transport.
Thus far, activities within and outside the ETS have taken place separately, although the common aim is to reduce GHG emissions. One possibility to combine the two is through so-called Non-ETS Offset projects, which would reduce emissions of CO2-eq. in the non-ETS sectors and trade these as CO2 credits on the ETS market. This would enable installations covered by the ETS to purchase CO2 credits from a domestic offsets project and add these to the number of CO2 emission allowances that they must surrender to the European Commission by the end of each year.
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