How does the EU's Emission Trading Scheme work?
The EU Emissions Trading Scheme (ETS) is a cap-and-trade system designed to reduce greenhouse gas (GHG) emissions across the European Union (EU). In order to do this, the ETS places a limit, or “cap”, on the total amount of GHG emissions that can be emitted by certain industries, such as energy and manufacturing. Companies in these industries must then acquire emission allowances — permits to emit GHG — from the government in order to operate. Companies that emit GHG above and beyond what their permit allows must purchase additional permits from other companies that have not used all of their permits. Companies that manage to reduce their emissions below the cap can then sell the extra permits to other companies. By making companies pay for their emissions, the ETS creates a financial incentive for businesses to reduce their GHG emissions. The ETS also distributes funds raised through the sale of emission permits to governments in order to support low-carbon activities like renewable energy investments. In Pennsylvania, the ETS has been used in combination with other targets and programs to reduce GHG emissions within the state. For example, the Pennsylvania Climate Change Act of 2008 set a voluntary reduction target of 8% reductions in GHG emissions below a 1990 baseline by 2020. In addition, the Pennsylvania Department of Environmental Protection began the E-Power PA program, which offers incentives to businesses that achieve specific energy savings and reduce their emissions. By using a combination of the ETS, target setting, and incentive programs, Pennsylvania has been able to successfully reduce GHG emissions and create incentives to continue reducing emissions in the future.
Related FAQs
What are the differences between double tax avoidance and tax evasion?How are foreign subsidiaries of multinationals taxed?
What are the rules for taxation of foreign real estate?
What is the taxation of intra-group transactions?
What are the implications of Double Taxation Treaties?
How does taxation of foreign investments work?
How does a Value Added Tax (VAT) work?
What are the implications of the specific taxation regimes of different countries?
How has the globalisation of markets impacted international tax laws?
How do governments apply double tax treaties?
Related Blog Posts
An Overview of International Tax Law: What You Need to Know - July 31, 2023Key Principles of International Tax Law - August 7, 2023
Learn About the Basics of Cross-Border Tax Cooperation - August 14, 2023
Understanding the Double Taxation Principle and How It Affects Businesses - August 21, 2023
A Guide to International Tax Planning Strategies - August 28, 2023