Covered sectors refer to the industries and activities included under a regulatory framework, such as an Emissions Trading Scheme (ETS). These sectors are subject to specific rules and obligations, such as monitoring, reporting, and reducing their greenhouse gas (GHG) emissions. The inclusion of these sectors is determined based on their significant contribution to emissions and their potential to achieve reductions.
The main coverage sectors by the EU ETS are power generation, energy-intensive industries, manufacturing, and aircraft operators. It is to be extended to maritime and road transportation, as well as international flights.
Key Features:
- Emission Intensity: Typically includes industries with high levels of GHG emissions, such as energy, manufacturing, and transportation.
- Scope and Regulation: Covered sectors must comply with the rules of the framework, such as surrendering emission allowances or adhering to caps.
- Policy Impact: The sectors included can evolve as policies expand to address broader environmental challenges.
Importance:
- Emission Reductions: Targeting high-emission sectors ensures significant progress toward climate goals.
- Market Development: Covered sectors drive demand and supply in carbon markets, shaping their dynamics.
- Economic Transition: Inclusion in regulatory frameworks encourages these sectors to adopt greener technologies and practices.