(Carbon) Emission Allowance

An emission allowance is an allowance, credit or similar instrument that:

  • is issued or created by or on behalf of:
    • a government, a government of a foreign country, a government of a political subdivision of a country, a supranational organization or an international organization (each of which is in this definition referred to as a "regulator"),
    • a board, commission or other body established by a regulator, or
    • an agency of a regulator;
  • can be used to satisfy a requirement under a scheme or arrangement implemented by, or on behalf of, a regulator to regulate greenhouse gas emissions, or a prescribed scheme or arrangement; and
  • represents a specific quantity of greenhouse gas emissions expressed as carbon dioxide equivalent (for example, one metric ton of carbon dioxide equivalent).

An allowance, credit or similar instrument that does not represent a specific quantity of greenhouse gas emissions does not satisfy the third criterion even if it otherwise meets the requirements of a scheme that seeks to regulate greenhouse gas emissions. For example, an instrument that is required to undertake certain manufacturing activities that generate greenhouse gas emissions but that does not represent a specific quantity of emissions would not meet this third criterion. The definition also includes property that is prescribed by regulations. Currently, no property is proposed to be prescribed.

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