The emission trading scheme is one of the main means of fulfilling the international climate commitment set in the Kyoto Protocol and Denmark has pledged to reduce its total CO2 emissions by 21 % compared to the 1990 level.

Denmark has ratified the EU directive on greenhouse gas emission allowance trading and made it law. The government regards the emission allowance trading scheme as a vital element in the Danish climatic strategy from February 2003.

Roughly 380 Danish production units are covered by the CO2 allowance trading scheme. Most of these are generators of power and heat, the rest are industrial enterprises plus a few production units within the offshore sector. Over 10,000 production units are affected by the scheme throughout the EU.