IASB Meeting September 2005

Emissions trading

The Board decided to add this topic to its agenda. Rather than a new IFRS, the output from the project is expected to be amendments to existing Standards, so that they better address the main accounting issues raised by emission trading schemes.

In reaching its decision to add the topic to the agenda, the Board noted in particular the increasing international use (or planned use) of schemes designed to achieve reduction of greenhouse gases through the use of tradable permits. It also noted that there was a risk of diverse accounting practices for such schemes following the withdrawal of IFRIC 3 Emission Rights and that this would impair the comparability and usefulness of financial statement information.

The Board noted that the emissions trading project would interact with its current project to revise IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. Accordingly, the Board decided first to consider the treatment of permits and licences (including emission rights) issued to entities by government for less than fair value as part of its IAS 20 project. Once it issues an exposure draft of amendments to IAS 20 it will consider other issues relating to emission trading schemes, for example the subsequent accounting for emission allowances and credits.