Swaps

Installations and airlines are allowed to use CERs from Kyoto Protocol projects (CDM or JI) for compliance in the EU ETS. The number of Kyoto credits which can be used depends on the rules of different member states. In Phase II, this varied mainly between 0% - 22% of the allocation across the EU for stationary installations and it was a fixed 15 % of the verified emissions for the aircraft operators.

In Phase III, stationary installations can also use Kyoto credits. The number that can be used in Phase III is (A) the higher of (i) the number which could be used in Phase II and (ii) 11% of the total allocation in Phase II (B) less the number if Kyoto credits actually used for compliances in Phase II. Aircraft operators also shall be able to use credits up to an amount corresponding to a percentage, which shall not be set below 1.5 %, of their verified emissions during the period from 2013 to 2020.

The opportunity

As Kyoto credits cost less than EUAs, installations can save money by purchasing and using Kyoto credits rather than EUAs for compliance. The EUA-CER spread is the difference in price between EUAs and CERs. Historically this has ranged between €1 and €10. Check the current spread on myvertis.com.

As a result of this, many companies like to swap EUAs for Kyoto credits by selling EUAs and simultaneously buying Kyoto credits. It is a risk-free way of raising additional cash or compliance units. Some companies also trade the spread, buying and selling the spread as it moves up and down.

Please download the VERTIS SWAP TRANSACTION (PDF, 58.3 KB) product sheet.

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