||This paper analyzes the global and local impacts of the Emissions Trading Scheme (EU ETS) implemented at the beginning of 2005 by the European Union. The underlying idea of the EU ETS is to reduce emissions of greenhouse gases with minimal dead weight loss. To achieve this target, there was established a new market-based mechanism of regulation – system of tradable Emissions Unit Allowances (EUAs). Today, the EUAs function as liquid financial product that is traded on a quickly growing international market, which is, however, very vulnerable to exogenous shocks (such as are political decisions) that also caused the collapse of this market in April 2006. The EU ETS is, because of its complexity (it covers more than 13,000 installations in 25 countries), a multifaceted topic that requires both macro- and microeconomic analysis. The aim of this paper is, however, to examine only certain aspects of the scheme – the potential surplus of EUAs assigned to Czech companies (micro) and the potential demand for the Czech EUAs surplus from side of other EU Member States (macro) – emphasis is laid on finding the answers on two key questions: Is the scheme functioning in sense of contributing to the climate change abatement? Does the scheme really have the expected positive impact on Czech Republic?