Page 2 of 4
Different legal systems and solutions
EUA allowances, as well as CERs in a modern economy are rights of considerable economic value. It would be a very useful possibility, to give them as security. But – as a analysis (Overview Report: Legal Frameworks for Emissions Trading in the European Union - available in the Internet www.akseli.tekes.fi) published already in 2006 shows – there are issues to be resolved.
The review, which encompasses four legal systems: United Kingdom, Sweden, Finland and Germany, stated in sum:
“In the United Kingdom the ability to securitize Allowances is implicit in the standard terms and conditions of the UK Registry which permit the nomination of an “additional authorized representative” as referred to in Article 23(2) of the Registries Regulation 2216/2004.
This AAR provides a mechanism for the security holder to exercise a veto over the transfer of Allowances without the necessity of transferring ownership.
The situation is more uncertain in Germany as the right to lien under Section 1274 of the Civil Code (Bürgerliches Gesetzbuch – BRB) is not currently capable of being disclosed, and therefore valid, in the German Registry. In both Sweden and Finland it is possible to register an additional authorized person, and such registration will enhance the effectiveness of any security given over Allowances.
In Finland, due to the categorization of Allowances as intangible assets similar to patents it is clear that Allowances will be property that can be subject to a business mortgage under Section 3 of the Business Mortgage Act (yrityskiinnityslaki 634/1984).”