Emissions Trading Schemes
Emissions trading schemes are designed to achieve a reduction of greenhouse gases through the use of tradable emission permits. The Board and the FASB are conducting a joint project to develop comprehensive guidance on the accounting for emissions trading schemes.
Is this project part of the Memorandum of Understanding?
No. The MoU sets out a Roadmap of Convergence between IFRSs and US GAAP 2006-2008.
Click here for more information on the MoU.
Next due process step
The staff has been researching the characteristics of the various emissions trading schemes that are in existence or are being developed. The staff plans to bring a comprehensive package of alternative accounting models to the Board in the third quarter of 2008. The timing of an initial due process document is yet to be determined.
Due process steps completed
Stage 1: Setting the agenda
At its September 2005 meeting, the Board added the topic of emissions trading schemes to its agenda. The project was added to the agenda following the decision in June 2005 to withdraw IFRIC 3 Emission Rights. The Board decided that it should address the topic in a more comprehensive way than was available to the IFRIC.
Stage 2: Project planning/status
The project is being conducted jointly with the FASB. The project does not have a working group due to its limited scope.
In February 2006, the Board decided to defer its project to revise IAS 20 Accounting for Government Grants and Disclosure of Government Assistance until further work is completed on other projects (in particular, the project to amend IAS 37 Provisions, Contingent Liabilities and Contingent Assets). Because the Board had previously decided to conduct the Emissions Trading Schemes project concurrently with the IAS 20 project, work on the former was also deferred.
In December 2007, the Board activated work on the Emissions Trading Schemes project. The Board decided to limit the scope of the project to the issues that arise in accounting for emissions trading schemes, rather than addressing broadly the accounting for all government grants (which would have involved activating the IAS 20 project).
At its May 2008 meeting, the Board discussed the scope of the project. It tentatively decided to address the accounting of all tradable emissions rights and obligations arising under emissions trading schemes. In addition, it will address the accounting of activities that an entity undertakes in contemplation of receiving tradable rights in future periods, eg certified emissions reductions (CERs).
Estimated project completion
The estimated project completion date is yet to be determined.
Related projects
There are important interactions between this project and other projects, particularly the Board’s consideration of amendments to IAS 37, revenue recognition and government grants
Further information: