The EU Emissions Trading System (EU ETS) incentivises participants to reduce emissions, putting a price on carbon by placing a cap on total EU greenhouse gas emissions from the power and industrial sectors and enabling trading of allowances to ensure emissions reductions are delivered cost efficiently.
The UK has also introduced a carbon price floor designed to top up the EU ETS carbon price to a target minimum level for the UK electricity generation sector, which sends an early and credible signal to drive investment in low-carbon electricity generation.
The UK's CRC Energy Efficiency Scheme (CRC) is designed to encourage large public and private sector organisations to reduce their emissions through energy efficiency. Energy companies have non-power generating emissions captured by the CRC.
The CRC is intended to change corporate behaviour, by increasing corporate awareness of energy usage and improve energy management.