The European Union's Emissions Trading System (ETS), launched in 2005, is the world's first major carbon market and remains the cornerstone of EU climate policy. It operates on a 'cap and trade' principle, whereby a limit is set on the total amount of greenhouse gases that can be emitted by covered installations. Companies receive or buy emission allowances and can trade these with one another as needed. The ETS covers around 40% of the EU's total greenhouse gas emissions, including emissions from power stations, industrial plants, and airlines operating within the European Economic Area.