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France moves forward with accounting for emission rights on basis of the business model

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04 Oct 2012

The French standard setter Autorité des normes comptables (ANC) has adopted on 4 October 2012 regulation 2012-03 on the accounting for Greenhouse Gas (GHG) emission rights and regulation 2012-04 on the accounting under French GAAP for energy saving certificates.

Under these regulations, GHG emission rights and energy saving certificates are accounted for differently based on the entity’s business model.  Under the “production” or “energy saving” business models, the GHG emission rights and energy saving certificates are considered as “administrative” raw materials consumed by GHG emissions or energy sales.  Accordingly, an asset (raw materials valued at cost) is recognised when GHG emissions or energy sales are lower than emission rights or energy saving certificates held. A liability is recognised when GHG emissions or energy sales are higher than emission rights or energy saving certificates held. Under the “trading” business model, GHG emission rights and energy saving certificates are recognised as inventory at cost (subject to depreciation) until sold.

The GHG emission rights regulation shall be applied for annual periods beginning on or after 1 January 2013 and the energy saving certificates regulation shall be applied for annual periods beginning on or after 1 January 2014. Earlier application for annual periods beginning on or after 1 January 2012 is permitted for these two regulations.

Full texts of the regulations are available on the ANC website (French language only):

The new regulations follow from the ANC discussion paper Accounting for Emissions Trading Schemes Reflecting Companies’ Business Models published in May 2012.

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