The European Union Emissions Trading System (ETS) is the world's first and largest international "cap-and-trade" carbon market. It sets a strict limit on total greenhouse gas emissions, requiring covered industries to buy allowances for every tonne of CO₂ they emit. The cap decreases yearly to drive down pollution

The European Commission will present its proposals for changes to the ETS on Friday and negotiations with member states will begin soon after.

The exact proposals are not currently known, but it is quite likely that the allocation of free ETS allowances will be extended and that the rules on how revenue from the sale of ETS allowances can be used will be clarified.

Estonia will also present its positions on the proposed changes, said Annaliisa Villsaar, Estonia's representative on environmental issues at Estonia's Permanent Representation in Brussels.

Estonia wants to approve its positions by October, when EU environment ministers gather for the Environment Council. An agreement among member states is planned to be reached by December.

One important change is that under the current directive, ETS allowances would fall to zero before 2040, but may not be included in the new plans which would mean that free ETS allowances would continue to be available after 2040.

This is important for Estonia because the oil shale power plants currently do not have to pay for all the carbon they emit, as free allowances are used. The state wants the system to be extended after 2040.

It also wants member states to retain the freedom to decide how ETS revenues can be used and for the administrative burden on companies and countries to be reduced.

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