Environment: Market forces

The European Union's Emissions Trading Scheme (EU ETS) is a huge undertaking, involving some 12,000 installations in the 25 EU member states, and trading some 2.1billion tonnes of CO2. The largest sector covered by the EU ETS is power generation, accounting for about 60% of emissions covered by the scheme. The goal of the scheme is, of course, to reduce emissions; each country has its own goal for reductions relative to 1990 levels. All the installations participating in the scheme have their own targets; emissions are capped, and those which emit less CO2 than their allocated target have credits which they can sell to companies emitting more. Many companies have, of course, been working to reduce emissions for some years. BP, for example, began implementing targeted greenhouse gas reduction programmes in 1998, committing to reduce emissions to 10% of 1990 levels by 2010.