Transactions and trading

Transactions containing allowances can be made between different types of accounts in the EU ETS, and to other emissions trading systems.

Transactions are carried out by authorised representatives of the transferring account holder. The time taken to complete the transaction depends on the account type and time delays.

Delays

Several transaction types require the approval of a second authorised representative. All transactions also require approval using the EU login mobile app.

The term for the transaction in the registry is “New Transaction”.

According to the Regulation (2020:1180) on certain greenhouse gas emissions, the Swedish Energy Agency shall allocate emission allowances to operators who are entitled to free allocation. The allocation is carried out each year no later than 30 June of the year to which the allocation relates. The decision on free allocation is made by the Swedish Environmental Protection Agency. The Energy Agency then allocates the decided emission allowances in the Union Registry.

If the Swedish Environmental Protection Agency intends to make an amendment decision, the allocation to those operators may in some cases be delayed.

In the fourth phase of the emissions trading system (2021-2030), all emission allowances are issued in EU-wide accounts by the European Commission in its role as the Central Administrator for the Union Registry. Free allocation can be obtained after an application to the Swedish Environmental Protection Agency.

The fourth ETS phase is divided into two allocation periods and two application rounds. The allocation periods are 2021-2025 and 2026-2030 and operators who are eligible for free allocation can apply before the start of the respective allocation period. The quantities are specified in national allocation tables and are based on benchmarks.

Allocation of emission rights (in Swedish, naturvardsverket.se)

By 30 September of each year, operators participating in the EU Emissions Trading System must surrender the number of allowances corresponding to the verified emissions of the previous year.

According to the EU Emissions Trading Directive, allowances issued from 1 January 2013 shall be valid for an indefinite period. Allowances issued from 1 January 2021 shall be valid for emissions from the first year of the fourth trading period (2021), in accordance with the regulation 2019/112.

EU Emissions Trading Directive (europa.eu)

When surrendering, the operator may use general allowances, aircraft operator allowances or Swiss allowances.

If enough allowances are not surrendered by 30 September, a penalty fee of €100 per tonne of emissions not covered by the surrender will be charged. The penalty fee does not remove the obligation to surrender the amount of allowances.

The transaction term in the registry is “Surrender allowances”.

Allowances issued before 2021 are marked as ETS phase 3 in the Union registry and allowances issued from 2021 are marked as ETS phase 4.

There are different ways to buy and sell allowances. Allowances can be purchased through auctions or directly between two parties, also known as OTC trading.

As a climate measure, operators in the EU ETS can choose to cancel allowances from the market by removing them. These units are moved to a special removal account for accounting purposes. They cannot re-enter the market.

By removing allowances, the total number of allowances available in the system is reduced, making it more expensive for operators to purchase additional allowances to cover their emissions.

The term for the transaction in the registry is “Remove allowances”.

There are two possibilities to apply for simplifications in the transaction procedure in the Union Registry:

1. Possibility to execute transactions with only one representative.
2. Possibility to execute transactions outside the trusted account list.

Please note that current features are implemented by default for a reason and that removing these security features with a simplified transaction procedure may pose risks.

Approval of transactions with one representative to accounts on the trusted account list

The default setting for all accounts is that two representatives are required to approve transactions to accounts on the trusted account list; one initiating the transaction and one approving the transaction.

Account holders can decide to allow the execution of transactions with only one representative. The change will then apply to transactions to all accounts on the trusted account list for the account in question.

The change to approval with one representative is initiated in the Union Registry by an authorised representative under the heading "Trusted accounts". The Swedish Energy Agency then sends a change form to the account holder by email. The form must be signed by two authorised representatives, or a signatory, and then submitted to the Swedish Energy Agency.

Please note that the change is made for one account. If the account holder wants to make the change to more than one account, the change needs to be initiated in the registry for each account to which the change is to apply.

Transactions to accounts outside the trusted account list

An account holder (for holding accounts) can decide to allow transactions to accounts that are not on the trusted account list.

The change is initiated in the Union Registry by an authorised representative under the "Trusted accounts" section on an account. The Swedish Energy Agency then sends a change form to the account holder by email. The form must be signed by two authorised representatives, or a signatory, and then submitted to the Energy Agency. If the account holder wants to make the change to more than one account, the change needs to be initiated on all accounts to which the change is to apply.

The change does not need to be made for trading accounts as that account type already allows transactions outside the trusted account list.