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Making The Most of Your Entitlement

What is my entitlement?

EU Emissions EntitlementsEvery operator of an EU ETS installation is able to use international credits – CERs and ERUs from the UN Clean Development Mechanism (CDM) and Joint Implementation (JI) respectively (together the Flexible Mechanisms) – to meet a certain percentage of their compliance obligation. Rather than being permits to emit CO2 either allocated or auctioned, these offset emissions against projects outside the scope of EU ETS that have reduced greenhouse gases by an equal amount.

You may simply want to source the lowest price offsets available, or you may to prefer to support a project with particular benefits for regions in which you operate. Either way, we offer unique direct access to our 100mt portfolio of in-house developed projects and an extensive network covering the secondary market, so are expert at meeting the most particular of requirements.

Why should I use it?

For every tonne of verified CO2 emitted ,for which you can surrender a CER or ERU instead of EUA, you will realise a profit equal to the spread between their prices. With international credits trading at record lows and EUA prices showing signs of recovery, this spread has become increasingly attractive and has reached over €6 per tonne. We can help you swap these instruments easily.

How many credits can I use?

This is calculated on an installation-by-installation basis. If your entitlement is already fixed you can find details of this in the EU Transaction Log.

Your Phase 2 allocation will depend on the country your installation is located in. We are happy to do the math for you

Which type of credits can I use?

To be on the right side of the new restrictions introduced into Phase 3 there are 4 key points to consider here:

  1. What technology is implemented by the project from which the credits were issued? Credits from projects for the reduction of of HFC- 23, adipic N2O and large hydro projects (a generating capacity over 20MW) are excluded from use.
  2. When was the project from which the credits were issued registered with the UN? Only credits from projects issued before 2013 are eligible – with the exception below.
  3. Where is the project from which the credits were issued located? If the project is based in a country that was on the UN list of Least Developed Countries (LDCs) at the time the project was registered then its credits are eligible up to 2020 even if that registration occured was after 2013 and even if that country is subsequently removed from the list.
  4. When did the emissions reductions to which the credits relate occur and for what compliance do you intend to use them?

If credits related to emission reductions were generated before 31 December 2012 they will have (Kyoto) Commitment Period 1 (CP1) identifiers, if generated after this they will be Commitment Period 2 (CP2). CP1 credits must be surrendered no later than 31 March 2015, i.e. if you are buying credits to surrender in respect of verified emissions after 2014 you will require CP2 credits.

Additional requirements for ERUs: ERUs must be related to emissions reductions generated before 31 December 2012, so all ERUs are CP1 as per the above. If they originate from projects hosted in EU Member States and relate directly or indirectly to activities in the scope of ETS Phase 2, they must also be issued by 31 December 2012, otherwise they must be issued by 30 April 2013.

Luckily all the credits within Camco’s portfolio are guaranteed Phase 3 compliant and we can source both CP1 and CP2 credits for you depending on your preference. One last consideration is whether you want the the credits to be exchange-tradable? Projects must be first approved for this, so the selection is narrower than Phase 3 compliant – Contact us for a list of approved projects

How can I use them?

Credits can no longer be used directly for compliance and must first be exchanged for Phase 3 allowances. Only compliance buyers are able to do this and only within the limits outlined above.

At Camco Clean Energy, We’d love to hear from you...

Get in touch for a walk-through of exactly what you need to do.

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