It seems to be an error in the definition of Delivering Party’s Replacement Cost in the Emissions Trading Master Agreement for the EU Scheme version 3.0.


Namely, this definition refers to the point A(i), but in our opinion should refer to the amount calculated in accordance with point A – without additional “(i)”.

This issue maybe matters not so much, but in so sophisticated and formalized master agreement as IETA is, can have some significance.

The case relates to the interest. The above mentioned point A(i) provides for Contract Price and this provision – read literally – would lead to the conclusion of “excess of the Contract Price over the Contract Price”. That of course has no sense.

Objective record sounds literally:

“[...] calculated on an amount equal to the product of the Default Quantity and an amount equal to the excess, if any, of the price determined pursuant to paragraph (A)(i) above over the Contract Price [...]”

In our opinion in order to achieve the integrity of the master agreement and real compensatory effect, interest should relate to the excess of Contract Price over the price in replacement transaction.

It’s interesting, that that intention is written unambiguous in the simplified IETA master agreement designated for single trade - Single Trade Agreement version 4.0, 2008.

What are possible solutions? More simple and unambiguous would be to replace above mentioned provision with provision of Single Trade Agreement:

“calculated on the amount determined pursuant to paragraph A above”

In our opinion, without such or similar change above mentioned provision of IETA Master Agreement is at least incomprehensible and may cause difficulties when it is necessary for the party selling allowances to claim for compensation, in case business partner turned out to be not reliable.

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