Allowance Price Containment Reserve

A mechanism used in cap-and-trade carbon markets to help stabilize the price of carbon allowances and prevent excessive price volatility. It operates by setting aside a specific number of emissions allowances that can be released into the market if the allowance prices rise above a predetermined threshold. By increasing the supply of allowances in response to high prices, the APCR helps to prevent cost spikes for businesses and ensures the market remains functional and effective in reducing greenhouse gas (GHG) emissions. This mechanism is designed to balance the environmental integrity of the cap-and-trade system with economic considerations, providing a safeguard against extreme price fluctuations.