In January 2005 the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced operation as the largest multi-country, multi-sector Greenhouse Gas emission trading scheme world-wide.

The scheme is based on Directive 2003/87/EC, which entered into force on 25 October 2003.

Allowances traded in the EU ETS will not be printed but held in accounts in electronic registries set up by Member States. All of these registries will be overseen by a Central Administrator at EU level who, through the Community independent transaction log, will check each transaction for any irregularities. In this way, the registries system keep track of the ownership of allowances in the same way as a banking system keeps track of the ownership of money.

The Commission provides guidance on the application of VAT (pdf ~13K) to emission allowances. DG Environment also provides its interpretation on the use of next phase allowances under Article 16(4), second sentence, of the Emissions Trading Directive.

The European Commission is preparing a review. In order to collect the views of stakeholders on a range of aspects of the EU emissions trading scheme, a web survey was carried out from June to September 2005. A report with the full results is in preparation and will be released in due time. Here are already some highlights (pdf ~2,7Mb).

The European Environment Agency has published a technical report on the application of the Emissions Trading Directive by Member States. The report is based on information in Member States' annual reports under Article 21 of the Directive and covers the period from 1 January – 30 April 2005.

• EU action against climate change: EU emissions trading - an open scheme promoting global innovation. (Brochure) (pdf ~4,5Mb)