Głowacki Law Firm

Emissions trading
Consequences of the new MAD Regulation regime for inside information for the emission allowances market – the threshold decisive
Thursday, 03 November 2011 17:27


It becomes evident now which participants of the emissions trading infrastructure are systemically important for carbon markets – and these findings will gain the rank of the regulatory text. This pivotal position of only certain installations will not give them any special privileges – but rather burdensome obligations and strict responsibility.


MIFID II and emissions – consequences under preliminary investigation
Tuesday, 01 November 2011 14:45

Currently, MiFID does not apply to the secondary trading of spot emission allowances.

What are the pivotal elements of the Commissions proposal on MiFID II as regards emissions? The issue of reclassification of emission allowances as financial instruments was extensively covered by media but is this really the case that capturing spot emissions trading by financial market legal infrastructure effects in entirely win-win situation for everybody? No, it isn’t and the Commission itself admits so in accompanying documents to the MiFID II/MiFIR proposals.


Discrepancies in views on the finality of transfers in emission trading among EU ETS and California cap-and-trade regulators
Monday, 17 October 2011 05:15

Final Regulation Order, version of October 2011 on California cap on greenhouse gas emissions and market-based compliance mechanisms has been currently posted on the website of the Californian Air Resources Board, together with accompanying documentation, among others, four Compliance Offsets Protocols.

Considering the potential participation in both GHG compliance programs: the European Union Emissions Trading Scheme and its Californian counterpart, it is noteworthy that the registry rules provided for in the Californian scheme are founded on the fundamentally different principle in the practical and legal functioning as regards the finality of transfers.


Last Updated on Thursday, 20 October 2011 20:06
The surrender of allowances initiated in error - the only reversible transaction pursuant to the draft of the Commission Regulation establishing a Union Registry of emission allowances
Monday, 05 September 2011 05:27


Initiating transactions and processes in the Union emissions registry after the new draft regulation enters into force will require careful consideration because the reversal of potential errors, mistakes and irregularities will be, in principle, legally and technically impossible.

Article 36(5) of the Regulation provides literally that during the 24-hour delay ‘an account representative may propose to the national administrator the cancellation of the transfer on the grounds of a suspicion that the transfer was initiated fraudulently’. Such a wording may create some doubts as regards the issue whether an account representative may propose to the national administrator the cancellation of the transfer on the grounds of a erroneously or mistakenly initiated transfer.

The implications of the European Market Infrastructure Regulation (EMIR) for commodity firms trading on the emissions market
Monday, 29 August 2011 06:03

As follows from Article 7(4) read in conjunction with Article 7(2) of the EMIR, for the qualification whether an OTC transaction regarding any derivative contract set out in Annex I Section C numbers (4) to (10) of the MiFID (including, consequently, also derivatives for which the underlying asset are emission allowances) entered into by the commodity firm, is subject to the clearing obligation, the decisive significance have two premises:

1) the positive: the breach of the clearing threshold value (to be specified by the European Commission through a delegated act),

2) the negative: the ability of the OTC derivative contracts entered into by a commodity firm to be objectively measured as directly linked to the commercial activity of that counterparty.


The new Australian emissions market - eligible international emissions units
Thursday, 25 August 2011 13:21

One of the most interesting things for investors in the Australian emission trading scheme will surely be the eligibility of international emissions units as compliance instruments under the scheme rules.


The new Australian emission market – will the investors wait till 2015?
Wednesday, 24 August 2011 20:13

In the period from 1 July 2012 to 1 July 2015 the new Australian emission market won’t really be a fully-fledged cap-and-trade.


Emissions allowances – are they property rights? Australia and California regulators’ views
Tuesday, 23 August 2011 19:06


As was reminded also in the accompanying documents to the MIFiD Directive recent review, the legal classification of emission allowances is not uniform in EU Member States. The said documents observed that some Member States consider emission allowances as property rights, whereas others consider them personal rights.

The nature and characteristics of these allowances (certificate giving the right  to emit 1 metric tonne of CO2) could lend themselves to be classified as an intangible asset or a physical commodity. Emission allowances themselves are not classified as financial instruments under MiFID. On the other hand, derivative contracts on these allowances (and other environmental credits) are financial instruments under MiFID under the same criteria as derivatives on commodities.


This interesting theoretical, but burdened also with multiple practical implications, discussion have moved recently into other continents with the spreading of cap-and-trades.


Draft REMIT Regulation does not cover EUAs – but for how long?
Friday, 05 August 2011 14:47


From the systemic point of view there is no reason, why gas would be treated differently, for the purposes of establishing a coherent regulatory regime for the integrity and transparency of the wholesale energy products, than other fuels for the production of the electricity - like coal, oil and even biomass.


CO2 emission performance standard – UK goes further than IED Directive
Thursday, 21 July 2011 21:10


On the surge of recent criticism as regards poor performance of the EU ETS as a means of emission reductions, EPS is minded as a regulatory backstop which will limit the emissions from new fossil-fired power stations. It has to be taken into account in any power generation business projections – in the UK for now.


Why importers of electricity into EU don’t have compliance obligation under EUETS?
Monday, 11 July 2011 20:42

It is common knowledge that power producers in many countries outside the EU are not facing carbon constraints similar to those present under European Union Emissions Trading Scheme.

As a consequence, there are, however, investors that consider building power facilities outside the EU and importing electricity (provided technical and regulatory requirements allow). It seems that such a situation may be perceived as a regulatory gap that should be eliminated as quick as possible in order to avoid undermining the objectives of the revised EU ETS Directive.


The possibility for freezing allowances and accounts – important change to the registry system
Friday, 24 June 2011 06:00


The possibility “for freezing allowances and accounts” is specified in more detail in Articles 70, 71 and 73 of the Commission’s proposal for the Registry Regulation amendment and amounts to three differing legal measures with distinct premises, effects and entities authorised to use them, i.e.:

- suspension of all access by authorised representatives,

- suspension of access to allowances or Kyoto units,

- suspension of processes.


Investing in Californian emission allowances – formal requirements
Wednesday, 01 June 2011 06:00


What does it mean CA GHG Allowance? If somebody wish to invest in such an assets for strictly speculative purposes should apply to ARB to become VAE. Beneath an approximation of what could be expected from an investor taking into account purely formal aspects of the potential application. The issue may gain quite practical importance in 2012 already.


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Cap-and-Trade Schemes

Flexible Mechanisms


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