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Emission allowance is a term used as a synonym for green house gas emission allowance. Is is defined by art. 3 (a) and (b) of the directive DIRECTIVE 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community which has been amended by the DIRECTIVE 2009/29/EC of 23 April 2009.

According to art 3 (a) Dir. 2003/87/EC allowance means an allowance to emit one tonne of carbon dioxide equivalent during a specified period, which shall be valid only for the purposes of meeting the requirements of this Directive and shall be transferable in accordance with the provisions of the directives. Therefore an allowance is tradable.

The term emissions is defined by art. 3 (b) Dir. 2003/87/EC. Emission means the release of greenhouse gases into the atmosphere from sources in an installation.

Considering that those green house gases which are subject to the EU-ETS have been extended by Dir. 2009/29/EC, the term emission allowance have been extended as well. Green house gases are listed in Annex II of the relevant directives (art. 3 (c) Dir. 2003/87/EC). Those are:

Carbon dioxide (CO2)
Methane (CH4)
Nitrous Oxide (N2O)
Hydrofluorocarbons (HFCs)
Perfluorocarbons (PFCs)
Sulphur Hexafluoride (SF6)

Art. 3 (c) Dir. 2003/87/EC has been amended and extended by the Dir. 2009/29/EC. Not only the aforementioned green houses gases are subject to the EU-ETS but other gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation.

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