Template:M summ EUA Annex (d)(ii)

This one is sure to have those with a liberal arts education pleading for mercy — but one thing we can say is this is a delivery failure that doesn’t arise through caprice of governments, regulators, market dislocation, or the overwhelming lack political will to care less about carbon emissions any more. This is where the Seller has, to put it bluntly, stuffed up.

Failure to Deliver is not an Event of Default

Here is the question we put to all EU Emissions Allowance Ninjas out there — and there must be some, Lord only knows there must; it can’t just be me out here wrestling with this. Surely it can’t. (Can it? CAN IT?) — why is a Failure to Deliver — here a failure to deliver that specifically isn’t a result of a Settlement Disruption Event, or Suspension of the European infrastructure, Abandonment of Scheme, Force Majeure or any of those other things —why is a Failure to Deliver an Emissions Allowance when it is due, without externality you can blame it on, not a normal old Section 5(a)(i) Failure to Pay or Deliver Event of Default like it would be for any other asset class? This strikes us as quite different to the common experience of settlement fails in the stock loan and repo markets, for example, which are famously not Events of Default, precisely because they happen all the time.

If anyone knows, do write in.