Emission trading for sectors of transport and buildings - time to integrate into business projections
- Category: Emissions trading
Although the start of the emission trading for sectors of transport and buildings is envisioned as from 2026 only (as an integral part of the Fit for 55 legislative proposals), given its scale and possible impacts it is useful to take a brief look at its main assumptions.
However, more specific questions also come to mind, in particular about:
- potential parallels to existing EUAs and EUAAs,
- admission of financial institutions to the new cap-and-trade system,
- qualification of the new emission allowances as financial instruments under MiFID II,
- VAT taxation.
Considering this, a more general ambiguity may arise: is the emissions trading system for road transport and buildings a continuity or a revolution?
The answer is available here.
REMIT carve-out removed from the regulatory agenda
- Category: REMIT
I have read recently one of multiple ESMA’s reports, and, I must say, it is pretty interesting to see how entirely subjective some important things are.
Consider REMIT carve-out: ESMA says it should be extinguished, it is bad, it flaws competition and a level-playing field between trading venues, etc.
Regulated markets - according to the ESMA - are the main victims because the electricity and gas products have been redirected to OTFs.
What’s funny, the same regulated markets say what an idea, they are happy with the REMIT carve-out.
European Commission triggers multilateral single-dealer venues trading in financial instruments
- Category: MiFID
European Commission in the public consultation launched on 17 February 2020 on the review of the MiFID II and MiFIR framework argues the multilateral single-dealer systems trading in financial instruments offer very similar functionality to a multilateral system, hence MiFID II/MiFIR should encompass these systems to ensure fair treatment for market players.
Combined with the cancellation of the REMIT carve-out (recent ESMA’s intention), it can diametrically change the regulatory landscape for a physically-delivered energy contracts.
Capacity withholding - contentious issue
- Category: REMIT
Capacity withholding can sometimes be qualified as manipulative practice to artificially cause prices to be at a level not justified by market forces of supply and demand (including actual availability of production, storage or transportation capacity).
The precise delineation in this regard seems to be somewhat vague.
It is not a desirable situation from the perspective of legal certainty issues.
The recent ACER’s clarifications (Guidance on the application of REMIT (4th edition, updated on 15 October 2019, pkt 6.4.1 (i), p. 38, 39), although helpful, do not make the issue entirely comprehensive.
The ACER itself declares that the Agency “is committed to provide further clarifying guidance with respect to justifications mentioned in Section 6.4.1.(i)”.