One allowance gives the right to emit one ton of CO2. Each member state has it own emissions quota and distributes these allowances among their industries. Companies that emit more greenhouse gases than they have permission for must buy extra allowances from the market. Similarly, companies that keep emissions below their allowance can sell their excess allowance in the market. The prices of allowances are determined in the free markets, which work like a typical stock exchange. The price of the allowance varies according to supply and demand.