Are the EUAs that I can buy the same as those that industries buy?
Summary
Investing in EU carbon allowances (EUAs) allows individuals to directly impact carbon emissions by removing allowances from the market, influencing the EU's carbon budget, unlike derivative investments. Homaio enables individuals to invest in spot EUAs, supporting responsible investing and the EU's climate goals.
By purchasing European Union Allowance (EUA) spot contracts, you effectively withdraw those allowances from the overall carbon budget available to industries. This is the exact same budget that manufacturers and power producers rely on for their decarbonization plans and financial projections. As a spot carbon investor, you have a tangible impact on material volumes of CO2 emissions.
EUA spot: the singular compliance-grade asset in a sophisticated marketplace
As the EU Emissions Trading Scheme (EU ETS) has evolved into a sophisticated marketplace, various contracts like spot, futures, and options are now continuously exchanged. However, only one type of contract can be used for compliance purposes: the spot contract. This is the contract that compliance entities, institutional investors, speculators, and now individual investors can access.
EUA spot contracts have a climate impact - derivatives do not
There is an important environmental impact for individuals to have access to the same carbon allowances as those used by compliance entities. This financial participation directly affects the EU carbon budget. Unlike derivatives that provide mere financial exposure, owning actual spot EUAs influences the total number of allowances in circulation, as it is equivalent to confiscating a certain proportion of carbon emissions from the common budget available to industries.
A different kind of financial assets
Since the EU ETS is both a regulatory tool and a marketplace, EUAs are a unique financial asset. They are not held just anywhere (like a standard bank account) but are managed within the Union Registry, a common platform that accounts for all holdings by market participants. This ensures that all spot EUAs, the financial contracts equivalent to the compliance-grade allowances, are tracked and managed uniformly.
Homaio's access to spot EUAs
Homaio has undergone the necessary procedures to open a spot EUA-specific account - those contracts that play an integral role in the EU's policy tool aimed at combating climate change. So, by enabling individuals to buy, hold, and cancel these allowances, Homaio empowers investors to make a tangible difference in reducing carbon emissions.
By purchasing a spot carbon allowance, you enter in competition with industrial representatives and power producers for their CO2 availability. Participating in this market helps tighten the market and reduce the overall carbon allowance, supporting the EU's environmental goals.
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