How does the system work?
The EU Emissions Trading System (EU ETS) aims to promote
reductions of greenhouse gas emissions in a cost-effective and
economically efficient manner. The system operates through the
allocation and trading of greenhouse gas emission allowances
throughout the EU. One allowance represents one tonne of carbon
dioxide equivalent.
An overall limit, or 'cap', is set by each Member State on the
total amount of emissions allowed from the installations covered by
the system. The allowances are then distributed by Member States to
the installations in the system.
Operators of all these installations are then free to trade in
allowances. For example, for an installation that has emitted less
than its allowances, the operator may sell the surplus allowances
to another operator whose installation has emitted more carbon
dioxide than its limit allows. This flexibility enables operators
to meet the national limit at lowest cost.
The system is currently in its second operating phase. Phase II
covers the period 1 January 2008 to 31 December 2012.
How to participate
SEPA is responsible for regulating installations based in
Scotland. Other regulators include the Environment
Agency 
(England and
Wales), the
Northern Ireland Environment Agency (Northern Ireland) and
Department for Business Innovation & Skills (Offshore
installations).
Each installation requires a Greenhouse Gas Permit. Operators
interested in participating are expected to monitor and report
CO2 emissions during each phase of the system. For more
information on permits, visit the Forms page of this site.
Charges for participating in the EU ETS are payable to SEPA. A
break down of the charging scheme can be found on the Current Charging Schemes page.
The EU ETS includes a requirement for independent verification
of data. Operators are required to use a
UKAS accredited verifier to check the emissions data from
their installations. The data is confirmed in a verified annual
emissions report, which is submitted to the regulator by 31
March of the following year.
Annual timetable of requirements for obligations
under the EU Emissions Trading System, in relation to monitoring,
reporting and verification of emissions. (From Defra's Operator's
Guide):
We have produced a guidance document to help UK operators comply
with their Greenhouse Gas Emissions Permit. This guidance is aimed
at operators included in the EU ETS under Phase II (excluding
aviation):
How to comply with your Greenhouse Gas Emissions Permit
To find out more visit
Defra’s Guidance for ETS Operators