Compliance Periods - Emissions Annex Provision

EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions A Jolly Contrarian owner’s manual™ 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) Section Compliance Periods in a Nutshell™ Use at your own risk, campers! (a) Scope This Annex applies to Transactions (each a “Transaction”) that are identified as EU Emissions Allowance Transactions where the Fourth Compliance Period is the “Specified Compliance Period”. Specified Compliance Period means the compliance period specified in the Confirmation. Third Compliance Period means the period set out in Article 16 of the Directive running from 1 January 2013 to 31 December 2020. Fourth Compliance Period means the period running from 1 January 2021 to 31 December 2030. view template Full text of Section Compliance Periods (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. view template Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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.

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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.

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See also

• Scope

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