EU ETS
Directive 2003/87/EC — EU Emissions Trading System, as amended (incl. Directive (EU) 2023/959)
Topic : Climate · Level : Regional
Today
Phase 4 runs; free allocation phases out 2026-2034. ETS2 delayed to 2028. Review proposal COM(2026) 616 under negotiation.
Summary
The EU ETS caps emissions from power, industry, aviation and shipping and lets companies trade allowances. A second system (ETS2) for buildings and road fuels starts in 2028; a review was proposed in July 2026.
Who is concerned
- Turnover
- non précisé
- Employees
- non précisé
- Listed company
- non précisé
- Sectors
- Power and heat
- Steel, cement, chemicals
- Aviation and maritime
- Building/road fuels (ETS2)
- Triggering activities
- Operating an Annex I installation
- Operating flights or ships in EEA
- Releasing fuels for consumption (ETS2)
- Extraterritorial reach
- No
Maritime covers 50% of voyages to/from EU ports; CBAM extends the carbon price to imports.
- Examples
- EU steel plant
- Shipping line calling EU ports
- Fuel supplier (ETS2 from 2028)
What the law requires
- Hold a GHG emissions permit and an approved monitoring plan
- Report verified emissions annually by 31 March
- Surrender allowances equal to emissions by 30 September
- Buy allowances at auction as free allocation declines
Penalties
€100 per tCO2e not surrendered, indexed to inflation, plus surrender of missing allowances; operator named publicly.
What this changes for a supplier in China
Indirect. ETS sets the EU carbon price used for CBAM certificates; Chinese exporters of CBAM goods face that price unless they show lower emissions or carbon paid.
Expected evidence
- Installation emissions per product
- China ETS allowance cost evidence
- Verified monitoring report
Tiers : Tier 1-2