EUA Carbon Trading

EU Allowances (EUAs) are a form of carbon allowance used as the main currency in the EU Emissions Trading Scheme (EU ETS). The EU ETS is a form of Carbon Emissions Trading scheme whereby total emissions are capped and companies are allowed to freely trade carbon credits between themselves such that the lowest cost of reducing emissions to the cap is achieved. EUA carbon trading takes place globally but is centred on European countries and trading hours because that is where most of the trading interest and all of the physical hedging interest lies.