CARBON MARKET SCHEME - ENVIRONMENT
News: European
Union members approve carbon market scheme, other climate laws
What's in the news?
● The
27 member states in the EU on April
25 approved a revamp to the bloc’s so-called carbon market, which is set to
make it more costly to pollute for
businesses in Europe, sharpening the main tool the EU has to discourage
carbon dioxide emissions in the industrial sector.
Key takeaways:
● The
changes to the EU’s Emissions Trading
System (EU ETS), more commonly called the bloc’s carbon market, are one of
five new laws given final approval after being proposed by the European
Commission and after a favorable vote at the European Parliament last week.
Emission Trading System:
● The
Emission Trading System is a cornerstone of the EU’s policy to combat climate change and its key tool for
reducing greenhouse gas emissions cost-effectively.
● It
is the world’s first major carbon market
and remains the biggest one.
● It
is also known as the bloc’s carbon market. The 27 member states in the European
Union approved a revamp to the carbon market.
Carbon Market:
● Since
2005, European factories and power plants have had to purchase permits to cover
their CO2 emissions, with the prices becoming more prohibitive as their usage
increases against norms for their sectors.
● The
idea is to create financial incentives
for keeping emissions in check, and penalties for failing to and to
generate funds for climate-related projects.
● It
applies to power-generation industries,
energy-intensive industries and the
aviation sector. Eventually, it will be expanded to cover greenhouse gases
other than CO2, such as methane and nitrogen oxides. Hence, statement 2 is not correct.
● The new rules increase
the overall ambition of emissions reductions by 2030 in the sectors covered by
the EU ETS to 62% compared to 2005 levels.