Emissions allowances within the EU – EUETS
– Purchase EUETS emission allowances for your company through ZeroMission
EU ETS – Emissions allowances from the EU Emissions Trading System
At ZeroMission , all types of companies can purchase emission allowances on the EU ETS carbon market to support and finance the phase-out of fossil fuel emissions in a real, measurable, and verified way.
Through us, you gain access to emission allowances and advice on trading, whether to meet your regulatory obligations or as a company that voluntarily wishes to use emission allowances as part of your climate efforts.
The primary market for EU ETS emission allowances is organized through an auction system. Most trading takes place on the secondary market, where companies or private investors can purchase emission allowances from resellers and brokers.
What are the EU ETS and EU carbon allowances?
The EU Emissions Trading System (EU ETS) is the world’s largest market for emissions allowances. The EU established the system in 2005 with the aim of reducing emissions within the EU to meet its own climate goals and the Paris Agreement’s 1.5-degree target.
Emissions trading is a very important policy tool in the EU’s climate and energy strategy for reducing carbon dioxide emissions.
The market goes by many different names, such as the “EU Emissions Trading System,” the “regulated carbon market,” or the “emissions trading market.”
EUETS – How the EU Emissions Trading System Works
Emissions trading is regulated in detail by specific EU directives and regulations. These frameworks are complex, but how the system works can be summarized in four points:
1
Emissions cap set
The EU sets the total amount of emissions allowed for all participants covered by the system—the so-called emissions cap. This means that the permitted amount of emissions is predetermined and decreases each year. Currently, emissions are to be reduced by 4.3% per year until 2028, and by 4.4% per year thereafter.
2
Emission allowances are distributed
The annual allowance for emissions is allocated in the form of emission allowances, which are sold (auctioned) or distributed free of charge to participating companies. The technical term for an emission allowance is “European Union Allowances” (EUA). Each emission allowance entitles a participating company to emit a certain number of metric tons of carbon dioxide.
3
Companies report emissions
All covered companies must report their emissions annually and surrender the corresponding number of emission allowances to the Swedish Energy Agency. Emission allowances can be bought and sold on a secondary market, which is also open to stakeholders and participants who are not themselves directly covered by the regulations.
4
Emissions allowances are bought and sold
If a participant has a deficit of emission allowances (i.e., if their emissions exceed their emission allowances), this must be covered by purchasing additional emission allowances. On the other hand, a surplus of unused emission allowances can be sold or saved. The price trend over the past year has also attracted investors and speculators who see opportunities to buy at a lower price and sell when the market rises.
Frequently Asked Questions About EUETS
European Commission auctions
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What are the European Commission's daily auctions of emission allowances?
Most trading in emission allowances takes place on the “secondary market,” where companies or private investors can purchase emission allowances from resellers and brokers.
The primary market for emission allowances is instead organized through an auction system.
Here's how it works:
- First, the European Commission sets the annual emission cap.
- The total annual cap is then divided into daily auction volumes spread throughout the year. In other words, the annual cap is divided into daily "batches." The full calendar is available on the website of the European Energy Exchange (EEX), which runs these auctions on behalf of the Commission. Auctions are held every working day between the second week of January and the second week of December.
- The auction format itself is strictly regulated by EU legislation. It is a single-round, sealed-bid auction, and all winning participants receive emission allowances at the same final price. Although thousands of companies are covered by the EU ETS, and hundreds of financial institutions are active in the market, only about 30 participants take part in the auctions. Typically, fewer than 15 bidders are successful on any given day.
The secondary market for EU emission allowances
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How does the secondary market for EU emission allowances work?
The secondary market is where emission allowances are traded continuously. However, trading in emission allowances mainly takes place on the European Energy Exchange (EEX) and the Intercontinental Exchange (ICE). EEX is a subsidiary of Deutsche Börse, while ICE is part of the New York Stock Exchange (NYSE) group.
Although primary market auctions are held exclusively on EEX, most of the trading volume takes place on ICE, which accounts for around 80% of all transactions. In 2024, the average daily trading volume amounted to almost EUR 4 billion, divided between spot contracts (for immediate delivery) and derivatives, including futures and options. Over a full year, this corresponds to a trading volume of almost EUR 800 billion.
Emissions allowances are traded continuously on these markets. This means that during market hours, they can be bought and sold at any time, with prices constantly adjusted based on the balance between supply and demand. This ensures high liquidity, but also leads to volatility. And as more participants become active in the market and more businesses and companies are covered by the system, price volatility is expected to increase further.
New participants in the regulated carbon dioxide market
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This Is How the Regulated Carbon Market Has Evolved for New Participants
The European Commission has gradually opened the market to new participants, particularly financial institutions. This has brought liquidity to the market, which has strengthened its functionality and enabled companies seeking to hedge against price risks over time to now have access to more sophisticated transactions—such as futures—rather than simple buy and sell transactions. At the same time, the scope of the regulations has been expanded to include additional industries and companies.
Components of the EU Emissions Trading System
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What parts are included in the EU Emissions Trading System?
Emissions trading currently includes the EU ETS (ETS1), ETS2, and CBAM.
- The EU ETS (ETS1) regulates trading in emission allowances for carbon dioxide emissions from manufacturing industries and facilities that produce electricity and heat, as well as aircraft operators and maritime operators (shipping companies).
- ETS2regulates trading in emission allowances for carbon dioxide emissions from the combustion of fuels in road transport, residential and commercial or public premises. It also covers parts of the energy, manufacturing and construction industries not already covered by ETS1.
- CBAM (Carbon Border Adjustment Mechanism) means that importers who bring certain goods into the EU from other countries must, from January 1, 2026, declare and purchase certificates for the greenhouse gas emissions associated with the goods. CBAM is administered by the Swedish Environmental Protection Agency.
The increased number of participants in the market meant that, from 2018 onwards, EU emission allowances were classified as financial instruments under MiFID II, the EU's financial market regulation. This enabled banks and investment funds to trade EUAs, either on their own behalf or on behalf of clients. Many brokers entered the market, making it easier for smaller companies to access the system.
These smaller companies often lacked the internal infrastructure or sufficient volumes to participate directly. At the same time, this increased market transparency and placed carbon markets under the supervision of ESMA, the European Securities and Markets Authority.
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