The system introduced in 2005 by the EU works on the “cap-and-trade” principle whereby a maximum limit is established on the total permitted greenhouse gas emissions.
Cap-and-trade asks companies to cap, trade, sell and buy emissions allowances as needed.
→ CAP: a maximum limit is placed on the total greenhouse gas emissions allowed by participating companies, mainly in the energy and industrial production sectors. The objective is to reduce this limit over time to ensure an overall reduction in CO₂ emissions.
→ TRADE: companies and institutions can exchange carbon quotas, i.e. purchase them in the event of excess emissions or sell them if they manage to reduce the accumulation of CO₂ in the atmosphere.
If part of the emissions needs to be offset, it is possible to access an international market through credit trading platforms.
In Europe, most purchases and sales are managed by a platform owned by Deep Green Carbon Credits GmbH (DGCC) which allows the various players in the sector to buy, sell and exchange CO₂ credits.
The value of a carbon credit varies depending on the purchase period and market performance.
Lately costs have been slightly higher, due to the increase in the price of gas which has led companies to use other sources of energy, renewable and fossil.
This method shows flexibility and incentivizes the reduction of emissions where these are most economically advantageous.
