The emissions trading system was the cornerstone of the EU's efforts to achieve climate neutrality by 2050. However, in its current form, it does not charge a price for the carbon that is part of imported goods. This column shows that while the scheme has been successful in curbing carbon emissions in the EU, it has come at the cost of increased imports of carbon-intensive goods. It also highlights that the extent to which firms can outsource their carbon emissions depends on the ownership structure, with foreign-owned firms better placed to reorganize production to avoid the system. (Justus Böning)