emissions trading scheme


emissions trading scheme

a scheme involving emissions trading. Abbrev.: ETS See cap-and-trade, baseline-and-credit.
Also, emissions trading system.
An emissions trading scheme is distinguished by the following components: a designated statutory authority is charged with issuing permits to emit a set volume of carbon dioxide; those industries that emit carbon dioxide are obligated to hold a sufficient number of permits to allow them to do so; permits may be traded in a marketplace established for that purpose, with the market setting the price; and the number of permits available in a given year is fixed, with the number available decreasing over time. Depending on the legislation enacted, the nature of an ETS may vary between jurisdictions. Variations include: the scope of the scheme, with certain industries being granted exemptions from participating; the issuing of permits, whereby some participants may be granted permits directly by the statutory authority, as opposed to those sold into the marketplace; the rate at which the annual permit cap is decreased; and the extent to which carbon credit holders may also be allowed to participate in the marketplace. Having fixed the volume of carbon dioxide emissions, it is of no consequence which parts of the economy generate the emission. This allows a government to set an overall cap whilst allowing the marketplace to best allocate the pollution concessions. As the number of permits issued is decreased overtime, demand for the constrained supply will increase the permit price, favouring low-emission energy sources and industrial processes. Those industries that by their nature are unable to adapt, such as the concrete industry, will be most severely impacted. In 2013, Australia became the first country in the world preparing to repeal legislation supporting emissions trading.

Australian English dictionary. 2014.

Look at other dictionaries:

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