<- Back
Summary

What sectors are covered by the EU ETS?

Summary

The EU Emissions Trading Scheme (EU ETS) is expanding beyond power and industry to include aviation (intra-EEA flights), maritime shipping (since 2024), and potentially buildings, road transportation, and agriculture to achieve carbon neutrality; this also includes buying carbon allowances in the European carbon market. This sustainable investment and climate finance effort aims for responsible investing and impact investment in areas like renewable energy through mechanisms like carbon tax and green bonds.

Return to Blog
Sommaire
Book a call

Since its inception, the European Union Emissions Trading Scheme (EU ETS) has expanded its coverage to encompass as many carbon emissions as possible.

Early Focus: Power Production and Industry

Electricity and heat generation are the decarbonization champions 

The power production sector, which accounts for just under 30% of total EU carbon emissions, has always been a primary decarbonization target for the EU ETS. The scheme has achieved significant emissions reductions in this sector, mainly thanks to the rapid phasing out of free allowances. The power sector is responsible for nearly 75% of the emissions reductions achieved by the cap-and-trade scheme up to date.

Making the industry cleaner 

Since the first years of operation, the EU ETS also covers energy-intensive industries, including oil refineries, steelworks, and the production of iron, aluminum, metals, cement, lime, glass, ceramics, pulp, paper, acids, and bulk organic chemicals. With significant results already visible in the power sector, the focus is increasingly shifting towards decarbonizing these energy-intensive industries.

Expanding Scope: Aviation and Maritime Shipping

Intra-EEA flights covered 

Since 2012, the EU ETS includes carbon emissions from aviation, however only for intra-European flights. Discussions are ongoing to extend this coverage to all flights arriving in and departing from the EU, as currently only around 20% of flights departing from Europe are covered.

Adding the maritime shipping industry 

In 2024, the EU ETS expanded to include the maritime shipping sector, which accounts for 3-4% of the EU's total CO2 emissions. This sector has a significant decarbonization potential, and shipping companies are required to submit EUAs for a progressively increasing proportion of their emissions, reaching 100% by 2027.

Future Directions: Buildings, Road Transportation, and Agriculture

The EU ETS 2, a new cap-and-trade scheme

Looking ahead, a new ETS scheme, separate from the current EU ETS, will be introduced  in 2027 to cover CO2 emissions from building construction and road transportation. This new scheme is necessary because pricing in these sectors could affect a large proportion of households. It will include robust funds redistribution mechanisms to mitigate any adverse effects on low-income citizens.

Pricing emissions from agriculture

The inclusion of emissions from the agriculture sector under the EU ETS is also under discussion. This is a sensitive topic, as it could cause social disruptions, but agriculture remains a significant source of carbon emissions. Denmark's recent implementation of a tax on agricultural emissions sets a precedent, suggesting that the EU can eventually follow suit.

The EU ETS has been consistently expanding its scope to tackle new challenges and sectors. It will continue to include more gases until it fulfills its mission - bring Europe to climate neutrality by 2050.

Do you like this article?

Share it with your network and introduce Homaio to those interested in impact investing!

The Homing Bird

A newsletter to help you understand the key challenges of climate finance.

Sign up to our newsletter

Utimate guide to carbon markets

Dive into the world of carbon markets, where economics, finance, and environmental science converge. Get your ultimate guide now.

Thank You !
Find our guide with the following link 👉
Download whitepaper
Oops! Something went wrong while submitting the form.
White Paper homaio

Do you like this article?

Share it with your network and introduce Homaio to those interested in impact investing!

Understanding in depth

How can investing in European Union Allowances accelerate emissions reduction ? 
April 22, 2025

How can investing in European Union Allowances accelerate emissions reduction ? 

The EU ETS, a carbon pricing system, reduces emissions and funds the energy transition. Investing in EUAs through platforms like Homaio further accelerates decarbonization by reducing available allowances, driving up prices, and triggering regulatory changes, offering a responsible investing opportunity with potential returns. This promotes ethical investments and responsible savings for a green portfolio.

Decrypting Trump’s impact on Climate - Part 2
April 22, 2025

Decrypting Trump’s impact on Climate - Part 2

Trump's climate action reversal shifts the global landscape, empowering China in green tech and challenging Europe's climate leadership and industrial competitiveness, while emerging markets face financing and policy uncertainty for sustainable investment and responsible investing. This impacts markets, repricing climate risk and creating volatility, requiring European investors to focus on technological sovereignty, socially responsible investments (SRI), green finance and ethical investments.

What is the EU ETS in the shipping industry? Impact for the maritime sector
April 22, 2025

What is the EU ETS in the shipping industry? Impact for the maritime sector

In 2024, the EU ETS expands to include maritime shipping, requiring companies to buy carbon allowances for their emissions, impacting shipping costs but aiming for greener practices and sustainable investment in line with EU climate targets; this responsible investing initiative faces logistical criticisms but is supported by various organizations. This affects how to invest your money in the context of green finance and the carbon market.

Understanding in depth

No items found.

You might also like

How can investing in European Union Allowances accelerate emissions reduction ? 
April 22, 2025

How can investing in European Union Allowances accelerate emissions reduction ? 

The EU ETS, a carbon pricing system, reduces emissions and funds the energy transition. Investing in EUAs through platforms like Homaio further accelerates decarbonization by reducing available allowances, driving up prices, and triggering regulatory changes, offering a responsible investing opportunity with potential returns. This promotes ethical investments and responsible savings for a green portfolio.

Decrypting Trump’s impact on Climate - Part 2
April 22, 2025

Decrypting Trump’s impact on Climate - Part 2

Trump's climate action reversal shifts the global landscape, empowering China in green tech and challenging Europe's climate leadership and industrial competitiveness, while emerging markets face financing and policy uncertainty for sustainable investment and responsible investing. This impacts markets, repricing climate risk and creating volatility, requiring European investors to focus on technological sovereignty, socially responsible investments (SRI), green finance and ethical investments.

What is the EU ETS in the shipping industry? Impact for the maritime sector
April 22, 2025

What is the EU ETS in the shipping industry? Impact for the maritime sector

In 2024, the EU ETS expands to include maritime shipping, requiring companies to buy carbon allowances for their emissions, impacting shipping costs but aiming for greener practices and sustainable investment in line with EU climate targets; this responsible investing initiative faces logistical criticisms but is supported by various organizations. This affects how to invest your money in the context of green finance and the carbon market.

You might also like

No items found.