In the European Union, there are two main tools to reduce greenhouse gases, which are responsible for climate change: the EU emissions trading system (ETS) and the Effort Sharing Decision (ESD).

The EU ETS covers between 40-45% of all GHG emissions and it includes most of the power sector, large industries and currently intra-EU flights. Installations under the EU ETS need to surrender allowances equivalent to their annual emissions. Allowances are either received for free, bought in public auctions or traded with other installations.

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