Project history
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).
At the joint Board meeting in October 2008, the Board discussed the accounting for emissions trading schemes. The session was educational and no decisions were made.
At its March 2009 meeting, the Board decided tentatively that an entity should recognise emission allowances received free of charge from government as assets. The allowances should initially be measured at fair value. The Board decided tentatively that if an entity receives allowances free of charge from the government, the entity incurs an obligation to reduce its emissions below the level represented by those allowances (ie its cap). Only if the entity fulfils this obligation will it be entitled to retain some of the allowances. The Board decided tentatively that the entity should recognise a liability for this obligation. The liability is measured initially at the fair value of the allowances received.
At the joint Board meeting in November 2009, the boards discussed the application of the definitions of an asset and a liability to voluntary cap and trade schemes. Staff requested the boards to provide guidance. No decisions were made at this meeting.
At the December 2009 meeting, the Board discussed the accounting for the right to receive allowances in an emissions cap & trade scheme before the related allowances have been issued. Staff requested the Board to provide guidance. No decisions were made at this meeting.