The yearly limit set on the total amount of greenhouse gas emissions that can be produced by entities covered by the Emissions Trading System. The limit is reduced every year at a predetermined rate, currently at 4.3%.

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.

A weekly report published by regulatory agencies, providing data on the positions held by different categories of traders in futures markets.