Company: DEFI
Filing Date: 2025-03-17
Form Type: S-1/A
Source: 0001387131-25-000058
Chunk: 113

Company: Tidal Commodities Trust I
Filing Date: 2025-03-17
Form: S-1/A
Chunk 113
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G”) (such as CO 2) that can be emitted by regulated entities. Capping and reducing the cap on GHGs is viewed as a key policy tool in reaching climate change objectives. The regime is designed to promote sustainable development by putting a price on carbon emissions. The regulator will then issue or sell “emissions allowances” to regulated entities, which in turn may buy or sell the emissions allowances to the open market. To the extent that the regulator may then reduce the cap on emission allowances, regulated entities are incentivized to reduce their emissions; otherwise, they must purchase additional emission allowances on the open market, where the price of such allowances will likely be increasing as a result of demand, and regulated entities that reduce their emissions will be able to sell unneeded emission allowances for profit. An emission allowance or carbon credit is a unit of emissions (typically one ton of CO 2) that the owner of the allowance or credit is permitted to emit. Futures contracts linked to the value of emission allowances are known as “carbon credit futures”. Descriptions of each of the EU ETS, CCA and RGGI are below:

| ● | EU                                                                                           
 ETS: EU ETS cap-and-trade regime is a cornerstone of the EU’s policy to combat               
 climate change and is a key tool for reducing greenhouse gas emissions cost-effectively.     
 It was the world’s first major carbon market and remains among the largest. The              
 EU ETS is a cap & trade mechanism that was launched in 2005 and has become the largest       
 GHG trading mechanism in the world, covering approximately 11,000 installations generating   
 carbon emissions in certain sectors, such as power generation, utilities, iron, steel,       
 and cement. Under the mechanism, each country has a national allocation plan that determines 
 the caps on GHG emissions for each participating entity.                                     |

Participants are allocated some free European Union Allowances (“EUAs”) and may purchase a proportion through auction. Participants have to monitor their emissions and after each year submit EUAs equivalent to their verified emissions. Participants that do not have sufficient EUAs can buy them from other participants that have a surplus, or within certain limits, use other eligible carbon credits for compliance purposes instead of EUAs. EUAs are allocated under the National Allocation Plan of each country within the EU ETS. Each EUA represents one tonne of CO2 or the equivalent amount of nitrous oxide (N2O) and perfluorocarbons (PFCs) (“CO2e”).