Template:M comp disc EUA Annex Abandonment of Scheme

There is something elemental and even mystical about a contractual scheme that contemplates its own non-existence, but when an instrument is a product of the law, and has no continuing existence but for the continued onward existence of the law, this is the place you find yourself. The law prescribes what should happen should the law change. This is rather like sober me leaving messages for drunk me to pay attention to later.

The Abandonment of Scheme is a classic use of a rare, but among connoisseurs, prized close-out valuation technique: the “then I woke up and it was all a dream” method where, if things don’t work out, everyone just forgets the whole thing happened.

ISDA’s crack drafting squad™ was keen on this in the 1992 ISDA but, till the Emissions Annex came along, hadn’t really revisited it for the seemingly very good reason it is barking mad. But the Carbon Squad™ appears to have thought otherwise.