Less is more

For the European Union Emissions Trading Scheme (EU ETS) to achieve its environmental goal of reducing carbon dioxide (CO2) emissions, it is vital that the total number of European emissions allowances (EUAs) issued is fewer than the total emissions of the installations covered by the scheme. This shortage of allowances stimulates demand, creating a price for emitting carbon, which companies can then weigh against the cost of physically reducing their emissions. Without a shortage of allowan

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