The European Emissions Trading System marks a turning point in European environmental and energy policy. For the first time, electricity companies and businesses from energy-intensive industries are required to reduce CO2 emissions. This also assigns a market price to the climate-damaging gas for the first time. It seems unavoidable that interests collide during policy formulation. The author examines the interplay between European and national policymakers as well as various interest groups: What role has the European Commission played, and to what extent does the introduction of this 'new' policy instrument actually induce a policy change in the EU member states? The author addresses these questions through a policy network analysis of the process from policy formulation to the approval of the first National Allocation Plan.