Scheme sets quotas for carbon dioxide production

By Fiona Harvey, Environment Correspondent
Published: July 29 2008 03:00

Companies covered by the European Union's emissions trading scheme may only produce a certain quota of carbon dioxide each year, writes Fiona Harvey .
They are given permits, each representing a tonne of the gas. Companies that need to emit more than their quota can buy spare permits from cleaner businesses.
The permits were issued free in the first phase, from 2005 to 2007, but from this year governments can auction a proportion.
Electricity companies gained hundreds of millions of pounds a year from the first phase of the scheme by passing on to customers the theoretical cost of buying the permits.
Copyright The Financial Times Limited 2008