Delivery - Emissions Annex Provision

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EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions

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(d)(i)(2) in a Nutshell

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(d)(i)(2) in all its glory

(d)(i)(2) Delivery
(A) Any obligation of Delivering Party to deliver Allowances pursuant to an EU Emissions Allowance Transaction shall be discharged by the completed transfer of those Allowances from a Holding Account of Delivering Party under and in accordance with the Scheme. A transfer of Allowances shall be considered to be completed for the purpose of a delivery obligation pursuant to an EU Emissions Allowance Transaction when the relevant Allowances are received at the relevant Specified Holding Account of Receiving Party, whereupon risk of loss related to the Allowances or any portion thereof transfers from Delivering Party to Receiving Party.
(B) Notwithstanding Part(d)(i)(2)(A) above, if Delivering Party has one or more Specified Holding Accounts for the relevant EU Emissions Allowance Transaction, Delivering Party’s obligation to deliver Allowances under an EU Emissions Allowance Transaction shall be limited to an obligation to deliver from any such Specified Holding Account of Delivering Party to the relevant Specified Holding Account of Receiving Party.
(C) Where Receiving Party has more than one Specified Holding Account in respect of an EU Emissions Allowance Transaction, such Specified Holding Accounts are set out in order of preference. Delivering Party shall deliver the Allowances to be Delivered to the first listed Specified Holding Account of Receiving Party on the Delivery Date unless, in respect of such Receiving Party’s Specified Holding Account, it is prevented from so doing by an event or circumstance that would be a Settlement Disruption Event or a Suspension Event if the first listed Specified Holding Account of Receiving Party were the only Specified Holding Account so listed. In such circumstances, the provisions of this paragraph will apply iteratively to the next listed Receiving Party’s Specified Holding Account (if any).
(D) If a transfer of Allowances is completed after 4:00 p.m., Central European Time, on a Delivery Business Day or at any time on any day other than a Delivery Business Day, then those Allowances will be deemed to have been delivered at 10:00 a.m., Central European Time, on the next following Delivery Business Day. If a transfer of Allowances is completed before 10:00 a.m., Central European Time, on a Delivery Business Day, then those Allowances will be deemed to have been delivered at 10:00 a.m., Central European Time, on that day.


See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs

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Pro tip: for tons of information about EU ETS and EU financial services regulation see Michał Głowacki’s magnificent website.

Emissions trading documentation
ISDA: EU AnatomyEU Wikitext EU Nutshell (premium) • UK AnatomyUK Wikitext (to be merged into EU Anatomy)
IETA: IETA Master AgreementIETA WikitextIETA Nutshell (premium)
EFET: EFET Allowances AppendixEFET Allowances WikitextEFET Nutshell (premium)



What counts as a delivery, when it is deemed completed, to which accounts and so on, and some curious over-description redolent of a bad used car salesman who really should have stopped talking, but found himself filling the uncomfortable silence with words which by their pregnancy compel him to complete his sentence, which in turn, he realises to his horror, compels him to confess mechanical flaws in the lemon he was really hoping you would drive off the lot with before discovering.



All tediously quotidian, largely-goes-without-saying stuff, until you stumble over subparagraph (B) like an inattentive trail-runner not noticing a tree-root.


Transfer from a specified Holding Account

Curious conditionality, across all three versions, where the Delivering Party specifies a Holding Account from which Allowances must be delivered, and not just the account to which they must be delivered. Quite why it should matter whence the Allowances come we cannot say — a vague fretfulness about theft perhaps? — but ok; let’s run with it.

Note, in any case, its moderation in IETA (5.2) whereby one has an obligation to make sure there are sufficient allowances in your account to satisfy your delivery obligation. So even though you can’t be forced to deliver from anywhere else, you can be sued for losses arising from your failure to ensure there was something to deliver in your Holding Account. All rather cack-handed, but in “fundamental upshot” terms, this does get to the right place.

The transfer is done once the Allowances hit the Receiving Party’s account (I know, I know: you don’t say.) But wait: there is an interesting use of the word “whereupon” here, upon which we dwell in a bit more detail in the premium section.

We’ll talk about (B) in the premium content section.

If the Receiving Party has designated multiple Specified Holding Accounts — as to why it would have multiple accounts, let alone specify them for a single Transaction we can provide no answer beyond basic bloody-minded perversity — but let’s just say — Delivering Party starts at the top and, if for some reason the first-named accounts are subject to some kind of disruption and the later ones are not — again, search us what might cause that — work its way down until it has delivered all EUAs. (If it gets to the bottom unfulfilled, see Settlement Disruption Event and Suspension Event).

If you deliver outside the normal window during business hours, your delivery is deemed satisfied at the next moment where a window on business hours opens. Workaday stuff that will be familiar with anyone who deals with the settlement of securities for a living.

But (B)? That’s weird. For more discussion on that, and a compare and contrast with the corresponding IETA provision, see the premium content.

Premium content

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  • The JC’s famous Nutshell summary of this clause
  • Deemed transfer and that curious word “whereupon”
  • More on that curious Section (d)(1)(2)(B) limitation of the delivery obligation to the Specified Holding Account

See also