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Since 2005, a new battlefield has emerged in Europe's fight against climate change.

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In the boardrooms of the EU's biggest firms, company directors now discuss greenhouse gas emissions

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in the same hard-nosed business terms as balance sheets, shareholder dividends or annual reports.

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The reason for this change is simple.

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Thanks to the European Emissions Trading Scheme, which began operating in January 2005,

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carbon dioxide emissions are now a tradable commodity.

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They can be bought and sold in exactly the same way as any of the other thousands of products

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traded on world markets every day.

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The Emissions Trading Scheme works by placing a limit or a cap

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on the amount of carbon dioxide companies can emit every year.

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At present, around 10,500 European installations are covered by the scheme,

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and each has been awarded an annual quota of carbon dioxide emission units.

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One unit equals one ton of CO2.

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Firms that emit more than their allowance must either pay a very hefty fine

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or buy surplus allowances from companies that manage to stay below their limit.