The buy-and-hold approach to voluntary EUA deletion

The concept of "buy and hold" is well-established in financial markets, where investors purchase assets with the intention of holding them long-term. In the context of voluntary EU Emission Allowance (EUA) deletion, a similar idea is sometimes applied: strategic purchasing, followed by deletion in the registry, to support climate action with clear documentation.

Understanding the Buy and Hold Strategy

In traditional buy and hold investing, the goal is wealth accumulation through asset appreciation. In voluntary EUA deletion, the objective is climate impact maximization through systematic market intervention. The approach involves:

1. Strategic acquisition: Purchasing EUAs during optimal market conditions
2. Deletion in the registry: Removing allowances from compliance use once deleted
3. Market availability: Reducing the allowances available for others to buy while you hold them
4. Price signal: Potentially reinforcing incentives to decarbonise over time

Unlike financial investments, the "return" on EUA deletion is measured in evidence quality and tonnage — a registry-backed record of allowances deleted, plus any broader incentive effects that may follow within the system.

The Compounding Effect of Permanent Deletion

Traditional buy and hold investing benefits from compound returns, where gains generate additional gains over time. EUA deletion creates a similar compounding climate effect:

Should the EUAs be Deleted Immediately?

Short answer: Timing can matter. Some approaches consider how EU ETS supply rules respond to surplus conditions, and choose to purchase and hold allowances before deleting them in the registry.

The Immediate Cancellation Problem

One consideration is the EU Market Stability Reserve (MSR), which can adjust auction supply in response to surplus conditions. In periods of high surplus, the system response can partially counteract the net effect of cancellations at the system level. The details depend on the current rules and market conditions.

A buy-and-hold approach: purchase now, delete later

In a buy-and-hold approach, an organisation may purchase EUAs and hold them before deleting them. Holding can reduce market availability immediately, while deletion later creates an irreversible registry record. The objective is to combine clear documentation with timing that reduces uncertainty about the broader system response.

Rather than claiming a guaranteed system-level outcome, the practical goal is to reduce avoidable uncertainty by considering current market conditions and how supply rules may respond.

The Network Effect

As more organizations adopt the buy and hold approach to EUA deletion, the collective impact creates a powerful network effect. Each additional participant:

• Amplifies the market constraint created by all participants
• Demonstrates growing voluntary demand for climate action
• Provides social proof for other organizations considering similar actions
• Creates political momentum for more ambitious climate policies

This network effect means that early adopters of voluntary EUA deletion are not just creating direct climate impact, but also catalyzing broader market transformation.

The Future of Voluntary EUA Deletion

As carbon markets evolve and climate urgency increases, buy-and-hold approaches to voluntary EUA deletion may become an increasingly important tool for organisations seeking credible, evidence-led climate action. The core idea is to combine strong documentation (registry deletion) with a thoughtful approach to timing and market dynamics.

The growing recognition of EUA deletion's advantages suggests that this approach will continue to attract organizations looking for credible, verifiable climate action that goes beyond traditional offsetting approaches.