Emission Trading

The EU’s emission trading system (ETS) has established a market designed to help member states control and reduce their emissions in various ways. Economic policies such as emissions trading, emission taxes and investment subsidies provide an alternative to more traditional ways of controlling emissions such as quantitative restrictions.

The ETS involves trading in the allowances issued by governments to give energy and industrial facilities and firms the right to emit certain quantities of the greenhouse gas carbon dioxide. All industrial and energy installations covered by the ETS must apply for emission allowances and report on their carbon dioxide emissions on an annual basis.

Unused allowances may be traded in accordance with ETS rules. Emission allowances may be allocated to firms and facilities according to their previous emission levels, or through auctions.

About half of all of Finland’s greenhouse gas emissions are generated by facilities covered by the ETS.

The ETS in Finland

In Finland the EU’s emission trading scheme is run by the Finnish Energy Market Authority, which allocates emission allowances, supervises the monitoring and reporting of emissions data, oversees certified emission trading, maintains Finland’s national emissions trading registry, and ensures that Finland meets its national commitments under the ETS.

The Energy Market Authority also registers annual emission allowances in the installation-specific accounts set up for each firm listed in the emissions trading registry, on the basis of the allocations of emission allowances assigned to these companies by the government.