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Chapter 3 of 8

What you hold

Most entities start with some allowances. The question is whether they are enough.

Carbonado

Carbon atom, four bonds · your guide to the market

The plant does not start from zero. It begins the year holding 45,000 allowances. Each one covers one tonne.

Owed 80,000, holding 45,000. The plant needs 35,000 more before year end.

Firms that start further behind tend to hold less, and cleaner firms more. That spread is what makes some firms buyers and others sellers.

You owe80,000 tYou hold45,000 tNeed 35,000 moreThe dashed gap is the shortfall. The rest of the year is about closing it,by cutting emissions or buying allowances.
Holdings cover part of what is owed. The rest has to be found.

Carbonado says:

Remember this

Your shortfall is what you owe minus what you hold. That is the number every decision for the rest of the year chips away at.

In the game: Look for "Allowances you hold" and "After using what you hold" (ALL COVERED or NEED N MORE).

Go deeper

Free Allocation

Allowances handed to firms at no cost, typically based on historical emissions or output.

Initial Allocation % in Intensity Markets

How the carry-forward setting seeds firms with allowances so a new market avoids a cold-start price spike.