The European Emission Trading System (ETS) was established in the EU. Companies that emit CO2 in their business have to purchase corresponding emission rights (so-called EU Allowances or EUA) in the amount of their emissions and cancel them annually. One EUA equals one metric ton of CO2.
When the system was introduced, certain energy-intensive companies were granted a certain amount of free CO2 emissions as part of the EU's climate policy. Some companies still receive free EUAs today as relief so that they are not unduly disadvantaged in international competition. If these companies do not use these emission rights in full, they can sell the remaining ones on the European energy exchange in Leipzig. Conversely, companies must purchase additional rights there if their emissions quota is not sufficient.
