As governments increasingly adopt policies to reduce greenhouse gas emissions, concern has grown on two fronts. First, carbon leakage can occur when mitigation policies are not the same across countries and producers seek to locate in jurisdictions where production costs are least affected by emission constraints.

Since 2005, the European Union has created an emissions trading scheme (ETS)that caps GHG emissions of power generation, but also of industrial activities whose products, in some cases, are traded internationally. The primary aluminium sector in Europe, whose direct emissions are not capped, stands to lose profit

This paper provides the latest developments of announced, proposed and existing greenhouse gas emissions trading schemes (ETS) around the world since 2006. It also examines different potential design options for ETS (e.g. coverage, allocation mode, provision for offsets), and how these options are treated in the existing, announced or proposed schemes.