What is the EU Emissions Trading System (EU ETS)?
The EU Emissions Trading System (EU ETS) is the world's largest carbon market. It puts a cap on greenhouse gas emissions from power generation, manufacturing, and aviation within the EU and EEA. Each year, the cap is reduced to drive decarbonisation.
Installations covered by EU ETS must surrender one EU Allowance (EUA) for every tonne of CO2 equivalent (CO2e) they emit. EUAs are traded on exchanges such as ICE (Intercontinental Exchange) and EEX (European Energy Exchange). Our EU ETS calculator uses your emissions and the carbon price to estimate total allowance cost.
EU ETS Cost Formula
The cost of EU ETS compliance is calculated as:
Total Cost = Emissions (tCO2e) × Carbon Price (€/tCO2e)
Where:
- Emissions (tCO2e): Total tonnes of CO2 equivalent emitted in the period
- Carbon Price: Market price of one EU Allowance in euros per tonne
Example:
Emissions: 1,000 tCO2e | Price: €85/tCO2e
Cost = 1,000 × 85 = €85,000
Which Sectors Does EU ETS Cover?
- Power generation: Electricity and heat
- Industry: Iron & steel, cement, chemicals, refineries, pulp & paper, ceramics, glass
- Aviation: Flights within the EEA
Phase IV (2021–2030) applies stricter caps and a Market Stability Reserve (MSR) to manage surplus allowances.
EU ETS Carbon Price 2025–2026
EU Allowance prices are set by the market and fluctuate daily. Typical ranges in 2025–2026 are €70–€95 per tCO2e. Our calculator uses a default of €85/tCO2e as a mid-range estimate; you can override this with the latest ICE or EEX price for your period.
EU ETS vs CBAM
EU ETS applies to emissions from installations located in the EU. CBAM (Carbon Border Adjustment Mechanism) applies to embedded emissions in certain imports (steel, aluminum, cement, fertilizers, electricity, hydrogen). CBAM uses the weekly average EU ETS price to value those emissions. Use our CBAM calculator for import carbon costs.