What it is
A permit to emit one tonne of carbon dioxide under a cap-and-trade scheme, the best known being the European Union’s Emissions Trading System. It is not a physical good, but it is issued in limited numbers and bought, sold and delivered much as a commodity is.
How it is usually quoted
Euros per tonne of carbon dioxide, for European Union allowances.
This is the customary unit of the reference market. Other markets for the same commodity may use another unit or currency, and an exchange can change a contract’s terms: its own rulebook is the authority.
Where the reference contract trades
ICE and EEX.
Named for orientation only. Naming an exchange or a market here does not mean that GIO4X gives access to it.
What commonly moves it
- The rules of the scheme: the size of the cap and how fast it falls
- The relative price of gas and coal, which decides which power stations run
- Industrial output
- Weather, through heating demand and the output of wind and hydro power
These are the things people who follow this market usually watch. They explain how the market works; they do not say what the price will do next.
Where it comes from
Allowances are issued by governments, not produced. The European Union, the United Kingdom, California, China and South Korea are among those that run such schemes.
The order of producers changes from year to year, so no quantities or shares are given here.
At GIO4X
Carbon allowances is not offered as a GIO4X instrument. This page is general education about a market that exists elsewhere, and nothing on it means that GIO4X quotes, trades or gives access to it.
The commodities GIO4X does list are Brent crude, gold, natural gas, palladium, platinum, silver and WTI crude.
Words worth knowing
A reference page. Educational information, not investment advice or a recommendation to trade. It gives no price and no forecast.