EU Allowances (EUAs)

EU Allowances (EUAs) are permits that allow companies in the European Union to emit a certain amount of carbon dioxide (CO2), as part of the EU's Emissions Trading System (ETS). Each allowance represents one ton of CO2. Companies that reduce their emissions can sell excess allowances to others that are exceeding their limits, creating a financial incentive to lower pollution. This system aims to combat climate change by putting a price on carbon emissions, encouraging businesses to adopt cleaner technologies and practices.