On 1 January 2005, a trading system for CO emissions from large industrial emitters. It is a 'cap
and trade' system, in which participants are assigned a set amount of allowances up front and are
required to report on their actual emissions each year. The EU ETS includes more than 11,000
power stations and industrial plants in 31 countries, as well as airlines. It covers around 45% of the
EU's greenhouse gas emissions. In the Netherlands, around 450 companies take part in the ETS.
They are responsible for around 45% of the total emission of greenhouse gases in the Netherlands.
In 2013, the EU ETS entered its third phase, running up to 2020. A major revision means that the
third phase is significantly different from the first two phases and is based on rules that are far
more harmonised than was previously the case. One of the changes is a single, EU-wide cap on
emissions instead of the previous system of national caps. Auctioning is now the default method for
allocating allowances. For those allowances that are not used up, harmonised allocation rules apply
that are based on ambitious EU-wide benchmarks for emissions performance. The ETS now also
includes more sectors (i.e. aviation) and gases (nitrous oxide, PFCs). Its allowances will be reduced
by 21% between 2005 and 2020 in order to lower the total emissions
In 2018, the ETS directive was revised to enable in order to achieve the EU's 2030 emission
reduction targets in line with the 2030 climate and energy policy framework. The revision defines
the fourth trading period as running from 2021 up until 2030 and includes a sharper rate for the
reduction of allowances in the period after 2020, as well as a reinforcement of the market stability