Introduction:
As the 30th April EU ETS compliance deadline draws near, companies must ensure they are well-prepared and avoid the risk of incurring a hefty €107 per tonne fine for any EU Allowance shortfall. With the challenges posed by the COVID-19 pandemic and remote work arrangements, it is crucial to stay organized and meet the purchasing, payment, and delivery deadlines. This blog highlights the importance of timely compliance, especially during a year when reduced demand due to the pandemic may already be impacting company profits.
Payment Deadlines:
When purchasing EU Allowances (EUAs), it is essential to arrange and transfer funds to the delivering party in advance of the delivery. This process often involves creating purchase orders and obtaining Finance Director approval. The allowances can only be released for delivery once the funds have cleared in the delivering party's bank account. Keep in mind that Euro transactions have daily bank payment cut-off times (typically around 3:45 pm BST, 4:45 pm CEST, but this may vary). Understanding your company's payment capabilities is crucial to ensure timely compliance.
Delivery Deadlines:
Once cleared funds are received, the delivering party can initiate the delivery of EUAs. Different registry account types are subject to varying delivery timelines governed by registry rules. Delivery can range from instant delivery to up to 9 days, depending on the delivering party's account type. Purchasing from an established market intermediary usually results in instantaneous delivery (if the receiving party's account is 'trusted'), or a 7 working day process if not done in advance. In the worst-case scenario, delivery can take up to 26 hours. It is important to note that the EUTL registry operating hours must also be considered. If an EUA delivery is initiated after 3:00 pm BST / 4:00 pm CEST, the countdown for delivery will not begin until the registry reopens at 9:00 am BST / 10:00 am CEST the following day. To ensure EUAs are in your compliance account by 30th April, delivery must be initiated before 3:00 pm on 29th April. Missing this deadline, even by a few hours, can result in substantial fines.
AR and AARs at the Ready:
Once the EUAs are received, surrendering them can be accomplished almost instantly. However, it is crucial to ensure that the relevant Authorised Representative(s) (ARs) and, if applicable, Additional Authorised Representative (AAR) are aware of the surrender requirement and have access to the company's EUTL registry account.
Conclusion:
While the surrender deadline for EU ETS compliance is on 30th April, companies must aim to complete their transactions 2 to 3 days earlier. This means ensuring purchases are finalized by Monday, 27th April 2020, at the latest. Falling short of these deadlines can have severe consequences, including the imposition of significant fines. It is crucial to stay informed, organized, and proactive to meet the compliance requirements and safeguard your company from unnecessary penalties.
