The emissions trading scheme is intended to help the EU to achieve, in a cost-effective manner, its Kyoto Protocol targets for limiting greenhouse gas emissions. It will start on 1 January, 2005 for an initial three years, 2005-2007.

An entity that exceeds its annual allowance will be fined. Through emission trading, an entity that has an allowance in excess of its actual needs may sell its surplus to an entity that expects to overshoot its allowance. Depending on the market price for the transaction, the latter thus has the option of buying its way out of a higher financial penalty.

Each NAP is subject to scrutiny by the Commission and the other member states, which in particular guard against the allocation to enterprises of overly generous allowances that would infringe competition rules. To ensure the proper functioning of the market in emission allowances, each Member State must maintain a registry of its allowances and transactions therein. Related monitoring and reporting requirements are specified.

Under the EU Emissions Trading Directive, Malta must set limits to the greenhouse gas emissions produced by industrial installations of a significant size and it must present these limits in an NAP. Limits are to be applied to the two Enemalta power plants. The Plan indicates limits that provide for growth in emissions, consistent with projections of growth in electricity demand.