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In brief: how the EU Emissions Trading System is reshaping the workforce
01/15/2026
New research sheds light on some of the unintended consequences of the EU’s Emission Trading System (ETS) on European companies – notably in terms downsizing of workforces or reducing assets.
The EU’s Emissions Trading system was created in 2005 to force polluters to pay for their greenhouse gas (GHG) emissions. It is based on a “cap and trade” principle. The cap refers to the limit set on the amount of GHG that can be emitted by companies in specified sectors including industrial manufacturing and electricity. Companies may also trade their allowances. If a company has spare emissions, they can either sell the spare allowances and/or store them to use in the future.