UBS Investment Bank & UBS Asset Management

The Emissions Trading Scheme is a market-driven approach to reducing pollution. It is based on the polluter payer principal and a cap and trade system. Polluters pay for their greenhouse gas emissions, which helps bring emissions down and generates revenues to finance the EU’s green transition.

By establishing a cap on the total emissions allowed and distributing emissions allowances among participating entities, the system creates a financial incentive for companies to reduce emissions. Entities that reduce their emissions below their allowance can sell their excess allowances to those who exceed their limits, encouraging investments in more sustainable technologies and methods.

The system operates in all EU countries plus Iceland, Liechtenstein and Norway (EEA-EFTA states) and covers emissions from around 10,000 installations in the energy sector and manufacturing industry, as well as aircraft and shipping (2024) operators flying within the EU and departing to Switzerland and the United Kingdom – or around 40% of the EU’s emissions.

Download the research report to learn more, and to discover the new UBS European Physical Carbon ETC.

This research report provides you with insights on:

  • How the EU Emission Trading System has developed
  • How ‘carbon leakage’ can be prevented
  • Why investors should take notice of the EU carbon market

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