EU Allowance (EUA) is the official title of the carbon credits or pollution permits traded in the EU Emissions Trading Scheme (ETS).
Each EUA represents one ton of CO2 that the holder is allowed to emit.
Allowance units are freely allocated or auctioned to members of the EU ETS and can then be sold or purchased through the carbon market.
Firms within the scheme must surrender EUAs equivalent to their emissions at the end of each compliance period. Those businesses that emit more carbon than their cap have to purchase extra EUAs, while those that manage to reduce theior carbon emissions below their cap are entitled to sell their excess EUAs.
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