60 second expert: The EU Emissions Trading System

What is it? A European Union policy introduced in 2005 to help Europe meet targets of reducing greenhouse gas emissions laid down by the Kyoto Protocol. The EU's first target in 2012 is to reach an eight per cent cut of 1990 emissions levels.
How does it work? Under the EU Emissions Trading System (EU ETS), around 11,000 companies responsible for almost half the EU's CO2 output are given a collective cap on the amount of greenhouse gasses they can emit. Within this overall total, each individual installation is given its own emissions allowance. Companies that don't use up their quotas may sell their surplus to those that need to exceed their allowance.
Which industries are involved? The major categories include combustion installations, mineral ore refineries, metal ore installations, producers of cement clinker, glass, bricks, tiles, stoneware, and porcelain and industrial plants producing paper and board.
Why is it topical right now? From 1 January the airline
industry must also comply with the EU ETS. It's a controversial decision which airline chiefs claim will cost the industry €3.5bn (£3bn) a year.
What do companies in the system have to do? Hold a greenhouse gas emissions permit as well as monitor and report emissions to the European Commission.
Where can I find out more?
www.environment-agency.gov.uk/ business/topics/pollution