Emission trading in Europe - a new instrument for environmental protection

This paper presents a new instrument for environmental protection in Europe, the emission trading system. Most business in the EU that will be concerned with the planned emission trading system until now were only able to gather very limited experience with the flexible instruments, especially the emission trade. The most important aspect of this contribution is the conclusion that the emission trading system includes both risks and opportunities for financial benefits. For each concerned business of the European industry, especially at the beginning of the system, companies have to decide about investments for reductions of greenhouse gases. The company of a concerned plant must have permission to emit greenhouse gases. In addition, it is to have allowances for its greenhouse gas emissions. Advantages lie in the use of organic fuels, in the emission trading system where the emission factor is set to zero. Disadvantages to European business is the expense connected to the costs involved in supervision, monitoring, report reimbursement and certification of greenhouse gas emission.