THE IMPACT OF THE EUROPEAN EMISSIONS TRADING SCHEME (EU ETS) ON THE EU SOCIO-ECONOMIC DEVELOPMENT

In 2005 the European Union introduced the Emissions Trading Scheme (EU ETS) which is an international cap-and-trade system realised at the level of an enterprise. Its aim is to reduce emissions of greenhouse gases (GHG) which are claimed to contribute most to the global warming. The EU ETS was built as a follow up of the Kyoto Protocol and currently is a cornerstone of the EU climate policy. The climate measures belong to important EU policies as different studies prove that the state of environment influences the rate of the economic growth in the long run. At the same time the EU ETS provoked development of a carbon market in the EU which may have impact on particular companies and sectors of the economy. Basing on the results of different research the paper examines how the EU ETS may contribute to socio-economic development of the EU. The first part covers theoretical considerations and is focused on the problem of climate change, economic growth and cost-benefit analysis of pollution mitigation. The second part explores main characteristics of the EU ETS as the main policy instrument of the EU climate action. Last part summarizes first results on the EU functioning and its impact on the economy from micro and macro point of view.