<div> This draft chapter discusses the main features and development of the&nbsp;<span>EU Emissions Trading System (EU ETS) from a law and economics perspective. The EU ETS is analysed in terms of environmental effectiveness and cost-effectiveness, while also paying some attention to fairness and solidarity. Although the EU ETS&nbsp;</span>operates successfully in meeting the emissions caps at relatively&nbsp;<span>low cost, it has also become a hybrid instrument with some inefficient design elements.&nbsp;</span> </div>