These are two of the most fundamental projects of the European Union to combat the nefarious effects of climate change.
EU Emissions Trading System
The EU Emissions Trading System, commonly referred to by the acronym EU ETS, is a key action of the European Union’s fight against climate change.
It’s also the Union’s main tool to cost-effectively help reduce the gas emissions that contribute to the greenhouse effect. The EU ETS is the fist and biggest major carbon market in the world.
It operates in all 28 countries in the European Union, plus Iceland, Norway and Liechtenstein. The system limits gas emissions from over 11,000 installations that are heavy in energy use, including industrial plants, power stations and airlines.
How does it work? The EU ETS works through a system based on a cap and trade principle. The cap represents the total amount of particular greenhouse effect gases that are allowed to be emitted by a certain installation.
The goal is for the cap to be gradually reduced with time in order for the grand total of emissions in the European Union to fall significantly.
A company can receive or buy emission allowances. They can be traded among businesses, but there is a limit on the availability of allowances. After each year, the company has to surrender enough allowances to cover the entirety of its emissions. Otherwise, the European Union imposes substantial penalties.
In the case of a company reducing its emissions, it’s permitted to keep the extra allowances for future coverage. It can also sell them to a business that is in need of allowances.
As one of the largest funding programs in the world, the European Union’s Innovation Fund emphasizes on driving clean and innovative low-carbon technologies towards the market.
The fund focuses on industries that are heavy in energy consumption, helping them implement low-carbon processes and have access to clean, cutting-edge technological resources.
The Innovation Fund also supports the generation of renewable energy, as well as the capture, storage and use of carbon. The funds come from the auctioning of 450 million allowances from the EU Emissions Trading System between 2020 and 2030.
The main objectives of the Innovation Fund are creating the right financial incentives for the development of low-carbon solutions, enhancing growth and competitiveness, and supporting all member states.
All in all, the ultimate goal of the Union with all of its environmental actions is a climate neutral Europe by 2050.