Subscribe to the Homing Bird for exclusive updates on carbon markets, economic news and sustainable investments that make a difference.
European Union Emissions Trading Scheme (EU ETS)
Discover how Europe’s most carbon intensive industries have reduced their CO2 emissions by +45% and how you can contribute.
In a few words
The EU Emissions Trading System charges emitters for their greenhouse gas emissions, thereby reducing CO2 emissions and generating revenue to finance the EU's environmental transition.
installations covered
across 29 countries
of EU Emissions
covered by EU ETS
millions tons of CO2
equivalent in 2022
Who is concerned?
The EU Emissions Trading System (EU ETS) strategically targets sectors that contribute significantly to the overall carbon footprint of the European Union.
This policy covers approximately 40% of the total CO2 emissions within the EU, targeting industries such as energy production, steel and cement manufacturing, maritime transport, or aviation.
By focusing on these key sectors, the EU aims to effectively address the most significant contributors to greenhouse gas emissions, thereby maximizing the impact of emission reduction efforts and advancing the transition at a scale and pace consistent with a sustainable future.
At its core, the EU ETS employs a “cap-and-trade” mechanism to regulate greenhouse gas emissions across various industries. Initially, the EU sets a cap on the total amount of emissions within covered sectors, which represent a significant portion of the EU's carbon footprint.
Since its inception, the EU ETS has achieved remarkable success in curbing greenhouse gas emissions. Between 2010 and 2023, the emissions regulated under the EU ETS witnessed a substantial reduction of -37% (-47% since 2005). This impressive decline underscores the effectiveness of the EU's emission reduction efforts.
The EU ETS incentivizes emissions reductions, encourages investment in cleaner technologies, and facilitates the transition to a low-carbon economy, ultimately spearheading global efforts to address climate change.
The market mechanism
The European Commission sets a cap on the total amount of allowable emissions within covered sectors. Based on this cap, EU allocates emissions allowances to the regulated industries at the beginning of each year.
In September of each year, industries must surrender to the European Commission as many allowances as CO2 emitted during the year, otherwise heavy fines are imposed. The compliance rate is over 97%
These allowances can be bought, sold, or traded among participants, fostering a market-based approach to emissions reduction. Industries can purchase allowances from the European Commission at daily auctions: the primary market. Or trade them with other participants: the secondary market. The price of allowances evolves constantly based on supply and demand. As the supply reduces over time, the price of allowances increases.
When the value of allowances increases, industries have a stronger incentive to invest in decarbonization to avoid the cost of emissions. It is estimated that increasing the price of a quota by 1€ per tonne leads to an average reduction of 0.73% of emissions over time.
By holding permits and reducing the available supply, investors put pressure on prices.
Climate Change is the most important problem of our time, and its up to our generation to solve it.
Investing in Homaio presents a unique opportunity to directly contribute to the acceleration of emission reduction efforts in EU ETS. As a company focused on sustainable investments in European Union Allowances (EUAs), Homaio redirect capital into the EU Emissions Trading System (EU ETS), a pivotal initiative in the fight against climate change.
By investing in EUAs through Homaio, individuals not only gain access to a lucrative financial opportunity but also become active participants in the transition to a low-carbon economy. Therefore, investing in Homaio not only promises financial returns but also drives tangible environmental impact by accelerating the reduction of emissions within the EU, contributing to a more sustainable future for generations to come.
Now you have well understand this market and strategy, you can be part of it and participate to the emission reduction of Europe.
Homaio wants to massively steer capital towards assets that effectively reduce emissions. It does so by unlocking compliance carbon markets for individual investors. Starting with European Union Allowances and gradually expanding to other emissions trading schemes around the world, it opens an entire new asset class designed for impact and returns to climate-conscious investors globally.
Carbon pricing is generally considered to be the fairest and most effective way of curbing greenhouse gas emissions. It seeks to put a price on carbon emissions. Carbon emissions are a cost to society in the form of global warming, and carbon pricing aims at shifting that cost back to emitters. Emitters therefore face a trade-off between reducing their emissions or paying for their costs. As carbon prices increase, so do incentives to reduce emissions. This fuels systemic changes in production, consumption, and investment patterns at scale.
These terms refer to entirely different markets. Carbon credits and carbon offsets refer to the removal or avoidance of greenhouse gas emissions in the voluntary carbon market. For example, by planting a tree (removal) or by switching from a woodfire cookstove to a cleaner cookstove (avoidance). Carbon credits are sold by the project developer to an individual or a corporation that wishes to offset their emissions. It’s an unregulated market which has witnessed its fair share of controversies. Carbon allowances are standardized trading units in regulated carbon markets. They represent the right to emit one ton of greenhouse gas by an industrial polluter within the issuing market. They have a capped supply, equivalent to the market’s carbon budget. That supply is gradually reduced, which progressively increases the value of each allowance and reduces emissions.
Homaio unlocks the carbon allowance market for individual investors. We're currently invite-only, accepting European investors looking to invest in assets designed for both impact and returns on an ongoing basis. If this sounds like you, you can register on the site or email carbon@homaio.com and we'll be in touch very soon.
