Due to concerns about global warming, the European Union has introduced measures to reduce carbon dioxide emissions. EU Emissions Trading Scheme (ETS) has been working since 2005 and its primary purpose is to reduce greenhouse gas emissions. Entities operating in this system can buy and sell the allowances, whose number is limited. Market rights to carbon dioxide emissions in the European Union is heavily regulated. Due to decreasing annually awarded free emission allowances, it is expected to increase in energy prices because its production is largely based on fossil fuels. The aim of the article is to present the principles of trading in European Union Emission Trading Scheme and to identify the main factors influencing the market price of emission allowances.
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