Allowances and credits: Who, What and Where?

The schedule below reviews the types of allowances and credits companies and traders may encounter.

JANUARY 2008 TYPES OF ALLOWANCES AND CREDITS
TYPE OF ALLOWANCE/CREDIT	WHERE DOES IT COME FROM?	WHAT CAN COMPANIES USE?	WHO CAN TRADE?
EU Allowances (EUA) Company allowance	The EU emission trading market. Member States issue and allocate European companies covered by the emission trading system a number of free allowances each year. The prices of allowances depend in particular on the reduction targets for each country, changes in oil and gas prices, the weather as well as expected developments in the EU emission trading market.	Allowances can be used by operators subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments) to surrender (pay for emissions) in the Danish Registry.	Allowances can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry) and they are valid for the period for which they were issued (e.g. 2008-12). Are renewed automatically at the start of a new commitment period.
AAU (Assigned Amount Unit) Country allowance	States issue AAUs corresponding to the country’s total agreed emissions for a commitment period.	The allowances cannot be used for surrender.	Can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry). Must be renewed at the start of a new commitment period (no limit).
RMU (Removal Units) Saleable credits from JI projects in industrialised countries.	Country allowances relating to removal of CO₂ via forest sinks etc. Issued by states according to agreements with the UN.	Allowances CANNOT be used for surrender by companies subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments).	Can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry). Lapse at the start of a new commitment period.
ERU (Emission Reduction Units) Saleable credits from JI projects in industrialised countries.	JI credits relating to reduction projects in industrialised countries, including most importantly Eastern Europe.	Credits can be used by companies subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments) to surrender (pay for emissions) in the Danish Registry up to a limit which is notified individually to each company. JI credits can only be used after 1 January 2008. Use of allowances for surrender requires prior approval from the Danish Ministry of Climate and Energy.	Can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry). Must be renewed at the start of a new commitment period, there are limits on the number of ERUs that can be renewed.
ERU from RMU (Emission Reduction Units from Removal Units) Saleable credits from JI projects in industrialised countries.	JI credits relating to projects on removal of CO₂ by forest sinks etc. in industrialised countries, including most importantly Eastern Europe. States convert RMUs to ERUs.	Credits CANNOT be used for surrender by companies subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments).	Can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry). Expire at the start of a new commitment period.
CER (Certified Emission Reductions). Saleable credits generated by projects in developing countries (CDM).	CDM credits relating to reduction projects in countries without reduction commitments (developing countries).	Credits can be used by companies subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments) to surrender (pay for emissions) in the Danish Registry up to a limit which is notified individually to each company. Use of credits for surrender requires prior approval from the Danish Ministry of Climate and Energy.	Can be traded by anyone with an account in the Danish Emission Trading Registry (or another European emission trading registry). Must be renewed at the start of a new commitment period, there are limits on the number of CERs that can be renewed.
lCER and tCER (Longtime Certified Emission Reduction and Temporary Certified Emission Reduction). Saleable credits generated by projects in developing countries (CDM).	CDM credits relating to planting or replanting forests in countries without reduction commitments (developing countries).	Credits CANNOT be used for surrender by companies subject to Kvoteloven (Danish Act no. 493 of 9 June 2004 on CO₂ allowances with later amendments).	At the moment the credits can be traded by anyone with an account in the Danish Emission Trading Registry, an impending revision of the Danish legislation will ban this trade.