European Union Allowances

Synonyms

EUAs,

Definition

EUAs were issued freely by the EU for several years at one go to be used within the Emission Trading Scheme (EU ETS). The ETS second phase began Jan 1 2008 and ends Dec 31 2012. All second phase EUA must be used within that period.

The EU ETS works on the ‘cap and trade’ principle. The overall volume of greenhouse gases that can be emitted each year by the power plants, factories and ther companies covered by the system is subject to a cap set at EU level. Within this Europe-wide cap, companies receive or buy emission allowances which they can trade if they wish (EC, 2014).

The EU ETS works on the ?cap and trade? principle. The overall volume of greenhouse gases that can be emitted each year by the power plants, factories and ther companies covered by the system is subject to a cap set at EU level. Within this Europe-wide cap, companies receive or buy emission allowances which they can trade if they wish (EC, 2014).