Unfortunately it does not say on a CER whether it is green or grey; you cannot see its colour.

So if you have CERs and you want to hold over green CERs for Phase 3 but you want to use up grey CERs in Phase 2, then you need a way of checking.  Alternatively, give us a ring and we can check for you at no charge.  But if you want to do it yourself, here’s how:

1.       Find out what project the CER comes from

To do this you need the serial number of the CERs you have.  At the end of the serial number is the UNFCCC project number.   This is what you need.

Here is a screenshot of a holding of CERs on a registry account.

2.       Find your project on the UNFCCC website

On this page http://cdm.unfccc.int/Projects/projsearch.html you can search for your project on the UNFCCC CDM project database.  Type in the project number in the box “Reference number” and search.

3.       Check the methodology of the project

Where your project is listed you will see a column for the methodology.  It is the fifth column in the table.

4.       Is it a disallowed methodology?

There are two kinds of projects which are disallowed so far under the grey CER rules (Commission Regulation no 550/2011, Article 1): those involving the destruction of HFC23 and of adipic acid.

These project kinds are covered by the following methodologies (you can check this here)

• AM0001 – Decomposition of fluoroform (HFC-23) waste streams
• AM0021 – Baseline Methodology for decomposition of N2O from existing adipic acid production plants

So, if the Methodology is either AM0001 or AM0021 then those CERs are grey.  If not, they are green.  In the above example the units are from project 0838 in India which indeed is an HFC23 project using AM0001.  So these are grey CERs… unfortunately!

5.       What next?

If you are planning to surrender the units in April 2013, then you can use grey ones for this.  In this case, if you find green CERs on your account, you can swap them for grey ones and benefit from a small premium, since green CERs are worth more than grey ones.

If you are not planning to surrender CERs in April 2013 but you want to hold them and carry them forward to Phase 3, then make sure that any grey CERs are sold or swapped in time, before 30^th April 2013.

Remember: we are happy to check green and grey CERs for you at no charge.

The European Commission has announced that the Union Registry will open on 20th June.  From 3rd June all transfers will be suspended on national registries to allow the migration of 30,000 EU ETS accounts from national registries to the Union Registry. Account holders in the EU ETS will be unable to access their existing accounts at member state registries during that period.

IMPORTANT IMPLICATIONS

• No transfers can be made on registries between 3rd June and 20th June 2012
  • Therefore, take this into account when you are planning transactions, fulfilling delivery obligations or receiving units.

TIMELINE

From 14 May: Account holders will not be able to open or close accounts or to modify account and account representative details, neither in national registries nor in the Union Registry.

From 3 June: The operation of national registries and the Union Registry will be suspended and account holders will not be able to access registry accounts – including allowances held in these accounts.

On 20 June: The Union Registry is activated!  Users of existing national registries will be able to use the Union Registry once they receive authentication credentials from their national administrator.  All emissions units will be transferred to the Union Registry

ACCESSING THE UNION REGISTRY

Account holders will have to comply with increased documentation requirements and security features to access them.  To obtain access a user has to be nominated by the account holder as an authorised representative, and must provide copies of their identity, home address and their criminal record.  These documents must be notarised or, if from a non-EU body, legalised.

FUNCTIONALITY OF THE UNION REGISTRY

The security functions of the Union Registry are advanced.  They include:

• 26 hour pending period for transfers
• “4 eye” approval, meaning two people need to approve a transfer
• SMS passwords for approvals

There is little information available today on new user functionality.  We do know of these two features:

• Trusted account list – accounts to which transfers can be made without the 26 hour pending delay
• Functionality to participate in auctions

More to come on this.

Some functionality will not be ready at the time of the activation.  The schedule for updates will be communicated by 15 July.

GN004_Airlines_Units

GN003_Airlines_Registries

Here are links to the first two guidance notes:

Getting ready to trade: GN001_VEF_Airlines_Getting_ready_to_trade

Use of CERs and ERUs for compliance: GN002_Airlines_Using_CERs_and_ERUs

These aren’t legal advice, but they are useful for the basics.

So much is clear from Directive 2008/101 Chapter IV Article 8 (that’s the 15% in 2012) and Directive 2003/87 Art 11a 8 (that’s the 1.5% in Phase 3).

Imagine the above airline only uses 10,000 CERs for compliance for the year 2012.  Can it use 5,000 more CERs in Phase 3, above and beyond the 12,000 allowed under Art 11a 8?

A reading of article 11a of the Directive can leave you no wiser.

However, we have asked someone at the European Commission.  He  replied: YES, an airline can carry forward unused “linking capacity” from Phase 2 to Phase 3.  That is, in the above example, the airline can use a total of 17,000 CERs or ERUs for compliance in Phase 3 [(15,000-10,000)+(1,500x8)].

“EUAA forward transactions will be very important for airlines who have joined the EU Emissions Trading Scheme from January this year.  This transaction is an important step towards creating liquidity of EUAAs,” said Barna Barath, CEO of Vertis Environmental Finance.  “We are pleased that with this trade, Vertis continues its pioneering role in the carbon markets on which we have focussed for over 10 years,” he added.

The two day conference examined the global political controversy surrounding the inclusion of airlines in the EU ETS as well as exploring practical topics related to emissions trading such as risk management, optimising operations, emissions trading strategy, a variety of types of emissions transactions, registries and a trading simulation.

Vertis’s Chairman James Atkins spoke about the brighter side of the EU ETS – looking at potential windfall gains which some airlines might generate and at the use of emissions trading as a practical and quick way of raising funding.  He also highlighted the importance of airlines of putting in place the basics in good time, practising low-risk trading with smaller quantities and deploying a low-risk simple compliance strategy.

Forecasts for EUAs

Forecasts for CERs

• They must have ratified the Kyoto Protocol.
• They must have calculated their assigned amount in terms of tonnes of CO2-equivalent emissions (i.e. their target number of emissions for the First Commitment Period 2008 to 2012).
• They must have in place a national system for estimating emissions and removals of greenhouse gases within their territory.
• They must have in place a national registry to record and track the creation and movement of ERUs, CERs, AAUs and RMUs and must annually report such information to the secretariat.
• They must annually report information on emissions and removals to the secretariat.

Some countries have struggled with meeting these requirements.  Those that fail will be picked up on by a process of expert review.  They then have to face the wrath of the Compliance Committee, which comprises two branches.  A Facilitative Branch, which aims to advise parties on how to comply, and an Enforcement Branch which determines whether or not a party is in compliance with its obligations under the Kyoto Protocol, and imposes sanctions if the party is not in compliance.

Since 2008 six Annex 1 countries have been sanctioned for failing to comply with the eligibility criteria – in five cases it is to do with not having adequate systems for estimating and reporting their national emissions.  These countries failed to put in place the right procedures and systems, provide enough resources or train up people adequately for preparing the inventory accurately and in good time.  The sixth case of Croatia relates to a technically complex issue of calculating of its base-line year emissions in 1990 which was before the break-up of formerYugoslavia.

Source: www.unfccc.int

Losing eligibility is not just a rap on the knuckles.  It has serious financial implications for both the government and companies in that country.  Governments are unable to transfer AAUs to other countries and are also unable to issue ERUs from Track 1 Joint Implementation projects.  Suspended countries have watched while the carbon prices have collapsed in recent months, unable to salvage value from their holdings of AAUs.

Where the country is an EU member state and included in the EU Emission Trading Scheme, without eligibility it is not possible to transfer EUAs in and out of the country.  This puts a halt to most spot trading of EUAs except for internal trade or for those governments or installations which had the foresight to establish arrangements outside their own country.  Before its recent suspension, for example, Lithuania, transferred some of its holding of EUAs out of the country so that it would be able to auction them during the period of suspension.

A relatively small investment in people and systems would avoid the substantial losses and inconvenience which can result from suspension of eligibility.