Specified Compliance Period - Emissions Annex Provision
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EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions
Section Specified Compliance Period in a Nutshell™ Use at your own risk, campers!
Full text of Section Specified Compliance Period
Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs
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Content and comparisons
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
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.