Beware the €107 per tonne fine! The EU ETS compliance deadline is approaching, don’t get caught short
The 30th April EU ETS compliance deadline is fast approaching and it is crucial that companies do not allow themselves to get caught out by purchasing, payment and delivery deadlines that come before this date. With so many teams spread out and working from home this year due to the COVID-19 pandemic, getting ducks in a row is particularly relevant this year. In a year when company profits are likely to be negatively impacted by reduced demand, thanks to Coronavirus, getting hit by a €107 per tonne for any EU Allowance shortfall will be particularly unwelcome. History tells us that member states do not tend to show much leniency and none have said that Coronavirus will be an acceptable reason to not comply with the deadline on time.
When making an EUA purchase, funds will typically need to be organised and sent to the delivering party in advance of any delivery. Payments may involve purchase order creation and Finance Director approval. Only when those funds are cleared in the delivering party’s bank account can the allowances be released for delivery. You will know best how quickly your company can make a payment, but remember there are also bank payment cut–off times each day for Euro transactions (typically 3:45pm BST, 4:45pm CEST but this may vary by bank and region).
Upon receipt of cleared funds, the delivering party will be able to commence delivery. Due to the registry rules that govern different registry account types, a variety of delivery timelines can apply. Delivery timing can range from instant delivery to 9 days and it is important to understand the timeline that is applicable based on the delivering party’s account type. When purchasing from an established market intermediary, delivery can be instantaneous (if the receiving party’s account is ‘trusted’ – a 7 working day process if not done in advance) or at worst delivery will take 26 hours. However, EUTL registry operating hours also need to be considered. Should an EUA delivery be commenced after 3:00pm BST / 4:00pm CEST the countdown until delivery will not begin until the registry re-opens at 9:00am BST / 10:00am CEST the next day. This means, to get the EUAs into your compliance account on 30th April, delivery has to have been initiated before 3:00pm on 29th April.¹ We have examples of companies missing this deadline by just a few hours and being hit with the fine, so don’t let that be you.
AR and AARs at the ready
Once the allowances are received, surrender can be achieved almost instantly but do make sure the relevant Authorised Representative(s) (ARs) and, if applicable, Additional Authorised Representative (AAR) are aware of the requirement to execute the surrender of allowances and able to log into the company EUTL registry account.
While the surrender deadline may be 30th April, for most companies the actual deadline in which to have transacted is 2 to 3 days earlier. This year that means getting your purchases done by Monday 27th April 2020 or, at the very latest, Tuesday 28th April 2020.
If you have any questions or you need help meeting your compliance shortfall at short notice, please give the Redshaw Advisors team a call on +44 203 637 1055.
1. It is possible for EU ETS installations to access their registry account and submit EUAs for compliance purposes right up until 11:00pm BST / midnight CEST on 30th April.