INTERNATIONALLY TRADED EMISSIONS UNITS NOT RECOGNISED AS EIEUs

 

Internationally traded emissions units that are not recognised as EIEUs include:

 

(a) some Kyoto Protocol emissions units, such as assigned amount units (AAUs), temporary CERs or long-term CERs; and

 

(b) emissions units traded within other emissions trading schemes, such as European Union allowances and New Zealand units.

 

Because, at this stage, these types of emissions units are not recognised under the Clean Energy Legislative Package, and are not financial products, no Australian Financial Services  licensing obligations apply to activities conducted in relation to these units. Other types of units may be prescribed by regulation as EIEUs in the future.

 

ASIC mentions that there are also a variety of other emissions units currently traded in domestic carbon markets in Australia and overseas (e.g. units issued according to the international Verified Carbon Standard). Further kinds of environmental products (called environmental units for the purposes of this guide) are recognised under other schemes associated with managing various types of environmental emissions and resources (e.g. renewable energy certificates issued under the Renewable Energy (Electricity) Act 2000).

 

ASIC considers these other emissions and environmental units are generally not financial products and are not used to manage a financial risk. Therefore, no AFS licensing obligations apply to activities conducted directly in relation to these other emissions and environmental units.

 

However, if a derivative is created over one of these types of other emissions or environmental units, the derivative itself is likely to be a financial product regulated under the Corporations Act. Additionally, if such emissions or environmental units are held as part of the scheme property of a registered managed investment scheme, the responsible entity will need to comply with the relevant requirements of the Corporations Act.

 

 

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