Allocations to district heating and high efficiency cogeneration and tariffs - regulatory problems
- Category: Implementation
The free allocations of EUAs to district heating and high efficiency cogeneration in the third trading period will be decreased by way of four different legal measures. The Directive 2009/29/EC thus treats CHP more favorable than electricity generators (which, with exception provided for in Article 10c, receive no free allocation at all) but place them in the much less advantageous position than sectors exposed to “carbon leakage”.
Taking into account that CHP and district heating and cooling in some Member States are obliged to apply prices included in regulated tariffs, it seems natural that national regulators, when approving the said tariffs, should take into consideration the costs of the acquisition of CO2 credits. The detailed extent of the inclusion of these costs into the tariff is yet contentious and, as regards the particulars of the evaluation of that cost, there are many details to be explored.
The regulatory uncertainty in that regard may negatively influence on any investment plans.
Daily Futures Contracts listed on ECX – assessment under MIFID and Regulation No 1287/2006
- Category: Emissions trading
EUA’s and CER’s Daily Futures Contracts traded on ECX are physically deliverable within two trading days - are they spot contracts or financial instruments triggering regulatory framework of MIFID?
The admissibility of changing individual allocations – enforceability and closure rules
- Category: Implementation
To put it briefly - in that regard the diversity isn’t desirable.
EUA/CER spread tendency and the legal framework for CER’s after 2012
- Category: Emissions trading
Despite an extensive variety of provisions relating to the status of CER units in the post-2012 legal framework of the Directive 2009/29/EC (aiming generally at securing stability of the long-term green investments), at least one of these provisions should be of particular concern to the CER buyers and investors.
Recent differentiation in VAT treatment of emissions transactions and the IETA master agreement
- Category: IETA Agreements - Commentary
Taking into account that ETMA’s last version (3.0) was designed in 2008, the question may arise whether the text of the master agreement shows the required elasticity, to cover the multiplicity of approaches taken recently in the matter of VAT taxation of EUAs, CERs and ERUs trading. Let’s remind that they are ranging from exemption from VAT and zero rate, through “reverse charge” to standard rate.
Transfer of allocated EUAs within the same group of companies – the problem persists
- Category: Implementation
It is a common practice that, in the course of restructuring, the groups of undertakings are closing non-effective installations and transfer the production to the most effective ones. Such an objective lies often at the origin of mergers and acquisitions in the capital market.
Taking into account the legal scheme of the EU ETS there are arguments that the abovementioned practice should be reflected in rules relating to installations that entirely or partially ceased to operate or significantly reduced their capacity, on the one hand, and the new entrant reserve on the other. But the aforementioned mutual legal dependencies unfortunately are not included in the text of the Directive 2003/87/EC.
The problem appeared already in the case law. The issue is now – but only as regards the third trading period - in the hands of the European Commission which is obliged by the Directive to adopt by 31 December 2010 legal measures provided for in the Articles 10a(7) and 10a(20) of the Directive.