What the EU is doing
A variety of climate-related initiatives have been implemented at EU and national levels since the early 1990s. The European Commission launched the European Climate Change Programme (ECCP) in 2000, working with industry, environmental organisations and other stakeholders to identify cost-effective measures to reduce emissions.
A cornerstone of EU climate change policies is the EU's Emissions Trading Scheme (ETS) launched in 2005. EU governments have set limits on how much CO2 some 10,500 power plants and energy-intensive factories are allowed to emit each year, accounting for almost half of the EU's total CO2 emissions.
The ETS gives a financial incentive to reduce emissions by establishing a market-based trading system. Plants that emit less CO2 than their limits can sell their unused emission quotas to other companies that have emissions higher than their allowances.
Companies that exceed their emission limits and do not cover them with emission rights bought from others have to pay hefty penalties. The ETS makes sure that emissions are cut where it is cheapest, and lowers the overall costs of reducing emissions.
Other ECCP measures include improving the fuel efficiency of cars and the energy efficiency of buildings (better insulation can reduce heating costs by 90%); increasing the use of renewable energy sources, such as wind, sun, tidal power, biomass (organic material such as wood, mill residues, plants or animal droppings) and geothermal power (heat from hot springs or volcanoes); and reducing methane emissions from landfills.
A second phase of the ECCP was launched in October 2005. The focus is on strengthening the EU ETS by tackling emissions from aviation and road transport, developing carbon capture and storage technology and funding measures to adapt to climate change. Proposals to include airlines in the EU ETS and reduce CO2 emissions from new cars have now been agreed.