The useful overview of the types and properties for international emission units in the Australian market is made currently by ASIC (Australian Securities & Investment Commission) in Regulatory Guide 236 titled ‘Do I need an AFS licence to participate in carbon markets?’. ASIC in its elaborations points to the following issues:

 

REGULATED EMISSION UNITS

 

The main distinction with respect to international emissions units in the Australian market is the delineation for so-called ‘regulated emissions units’. These are emissions units that are recognised under the Clean Energy Legislative Package and include:

• carbon units;

• Australian carbon credit units (ACCUs); and

• eligible international emissions units (EIEUs).

 

Not all of these regulated emissions units are eligible for surrender by liable entities to meet their surrender liability under the carbon pricing mechanism. However, all emissions units recognised under the Clean Energy Legislative Package are financial products for the purposes of the Corporations Act.

 

The types of regulated emissions units that are financial products include all of the units that are eligible for surrender by liable entities to meet their surrender liability under the carbon pricing mechanism.

Additionally, some regulated emissions units that are not eligible for surrender by liable entities, but that may be used to meet commitments in voluntary carbon markets (i.e. voluntary cancellation of units), are also financial products. These include the types of ACCUs and EIEUs that are not eligible for surrender by liable entities to meet their surrender liability under the carbon pricing mechanism.

 

However, certain types of emissions units traded on certain international carbon markets are not included within the definition of EIEUs and so are not a financial product.

 

ACCUs

 

ACCUs are issued by the Clean Energy Regulator under the Carbon Farming Initiative (for particulars see: ACCUs - what is worth a new carbon offset?).

 

The Carbon Farming Initiative is a scheme allowing persons to generate ACCUs through domestic emissions offset projects. Such persons are referred to as ‘project proponents’. To participate in the Carbon Farming Initiative, a project proponent must be recognised as an offset entity for the purposes of the CFI Act. The types of persons eligible to become a recognised offset entity include natural persons, or corporations, including persons acting as a trustee. Recognised offset entities can then apply for a project to be recognised as an eligible offset project.

 

ACCUs are periodically issued to project proponents in relation to the past performance of an eligible offset project in avoiding, reducing or sequestering emissions. Project proponents must open and hold an account in the ANREU, and ACCUs credited to them are issued directly into their account.

 

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