What is the European Emission trading system (EU-ETS)?
In January 2005, several European sectors including energy, metals, minerals and pulp and paper came under EU Emissions trading directive which sets carbon dioxide gas emission limits. If a company emits lower than its allowed limit, it may sell its extra allowance to other companies who are not meeting their targets. The penalty for violation is 40 for every ton of carbon dioxide over the limit, and a requirement to purchase the missing emission allowances. Starting 2008, this will be increased to 100. The law in the future may be extended to include the chemical, aluminium and transport sectors. In October 2004, the EU adopted a linking directive that allows companies to buy CERs from the Kyoto CDM mechanism to meet EU-ETS emission allowances, thus making the European industry take very strong notice of the CDM market. When a European company buys a CER, the company gets an EU emission reductions unit in exchange for surrendering the CER to the country government which the country wi
