In order to implement its obligation to reduce greenhouse gas emissions, as required under the Kyoto Protocol, the European Community created a Directive establishing a community-wide greenhouse gas trading system. Initial experiences with this new marketbased mechanism have been gathered since the beginning of the first trading period (2005-2007). Ecologic has been commissioned to support the drafting of the respective legal framework for the second trading period (2008-2012) and for future trading periods in Germany. The goal of the project is to optimise the legal and economic aspects of emissions trading.