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By requiring polluters to pay for their carbon impact, the EU ETS aims to rapidly accelerate industrial decarbonization. With the price of carbon rising annually, staying dependent on fossil fuels is increasingly costly for EU companies — making it urgent for businesses to align with decarbonization goals or face expensive penalties.
EU Allowances (EUAs) are a type of carbon allowance that allows companies covered by the EU ETS to emit a certain amount of CO2e. EUAs can be bought and sold on the market, and the variable market price of EUAs reflects the cost of reducing emissions.
Dec 17, 2020 · Since 2013, auctioning has been the default method for distributing allowances in the EU ETS. This approach implements the 'polluter pays' principle, ensuring that those who emit pollutants pay for the right to do so. Member States auction allowances according to the rules set out in the EU ETS Directive and Auctioning Regulation. This ensures ...
Trading - EUAs can be bought and sold on the secondary market through brokers or online trading platforms. These can be traded on various exchanges and over-the-counter (OTC) markets, and the price fluctuates according to supply and demand. Futures - It is possible to bank EUAs for use in future years.
Feb 29, 2024 · The EU ETS seeks to apply the ‘polluter pays’ principle by making companies bear more of the climate cost of their carbon emissions. It also offers a great opportunity for the EU to shift funding from polluting activities to climate action, innovation and energy sector modernisation.
This is the most transparent allocation method, as it shows that polluters should pay and how much. The auctioning is governed by the EU ETS Auctioning Regulation, which ensures that it is conducted in an open, transparent, harmonized, and non-discriminatory manner.
People also ask
What are EUAs & how do they work?
How are EU ETS allowances distributed?
How do EU Allowances work?
Who borne the costs of pollution?
How much money does the EU ETS generate?
How does the EU regulate the availability of EUAs?
EUAs. Installations covered by the EU ETS are obliged to annually hand over (also known as surrender) EUAs equal to their emissions the previous year. For example, an installation that emitted 1 million tonnes of CO 2 in 2020 would need to transfer 1 million EUAs to the European Commission’s central registry in 2021.
