“Returning” or subletting an equivalent amount of EUAs to regulators at the end of the compliance cycle, in order to match the released CO2 volumes by an installation covered by the scheme.

The trading unit is the carbon allowance, which represents the right to draw 1 ton of carbon from a capped carbon budget. In compliance markets, a regulatory entity fixes a certain amount (the cap) of allowed emissions for the year (the budget), and industrial polluters need to purchase allowances equivalent to their emissions. There are only as many allowances as the budget allows: the supply is capped. It is a regulated market in the sense that buyers have an obligation to hold allowances in equivalence to their emissions. Allowances are standard units issued by the regulatory body.

Energy produced from renewable or low-carbon sources, such as solar, wind, hydroelectric, and nuclear power, contributing to reduced greenhouse gas emissions and air pollution.