Compliance Periods - Emissions Annex Provision

EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions A Jolly Contrarian owner’s manual™ Compliance Periods in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. Compliance Periods in all its glory (a) Scope The provisions of this Part apply solely in respect of Transactions that (i) are identified in the related Confirmation as EU Emissions Allowance Transactions or as otherwise being subject to the terms of this Part [7] and (ii) specify in the related Confirmation the Fourth Compliance Period as the applicable “Specified Compliance Period” (each such Transaction, an “EU Emissions Allowance Transaction”). Specified Compliance Period: Means, in respect of an Allowance and an EU Emissions Allowance Transaction, the period as specified in the Confirmation for the relevant EU Emissions Allowance Transaction. Third Compliance Period: Means, in respect of EU Allowances and AEU Allowances, the period referred to in Article 16 of the Directive 2009/29/EC starting 1 January 2013 to 31 December 2020. Fourth Compliance Period: Means, in respect of EU Allowances and AEU Allowances, the period starting 1 January 2021 to 31 December 2030. edit Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs Resources and Navigation Index: Click ᐅ to expand: ISDA Emissions TOC EUA Annex - Premium Emissions Pro tip: for tons of information about EU ETS and EU financial services regulation see Michał Głowacki’s magnificent emissions-euets.com website. Emissions trading documentation ISDA: EU Anatomy • EU Wikitext • EU Nutshell (premium) • UK Anatomy • UK Wikitext (to be merged into EU Anatomy) IETA: IETA Master Agreement • IETA Wikitext • IETA Nutshell (premium) EFET: EFET Allowances Appendix • EFET Allowances Wikitext • EFET Nutshell (premium) Premium version of this page

Overview

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Why should the definition for the Third Compliance Period reference the precise Article in the Directive, in gruesome detail, and the definition for the Fourth Compliance Period not do so? We shall never know. Nor, but for the unending glee bestowed by pointing out ISDA’s crack drafting squad™ drafting inconsistencies, shall we ever care.

Summary

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The EU emissions trading scheme divides into a number of “Compliance Periods”. The first was three years January 2005 to December 2007, the second was four, from from January 2008 until December 2012, coinciding with the first commitment period of the Kyoto Protocol. The Third Compliance Period was eight years, from January 2013 to December 2020. The Fourth Compliance Period, also eight years started in January 2021 and will go until December 2030.

This is of some interest to those trading for physical settlement Allowances that might expire.

Scope

There is an interesting limitation penned into the Scope section of the Emissions Annex: despite talking about the Third Compliance Period, and defining it, and so on, and providing for the manifold contingencies that arise when having truck with Third Compliance Period Allowances, if you believe the Scope section to be any kind of limitation, you are only meant to deal with Fourth Compliance Period Allowances.

No doubt someone will have a compelling reason for that — do write in if it’s you — but we can’t think of one.

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• The JC’s famous Nutshell™ summary of this clause

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See also

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• Scope