Possible Treatment of Emission Permits in the Danish National Accounts Thomas Olsen, Statistics Denmark Prepared for the 1st meeting in the joint OECD-Eurostat Task Force on Emission Permits in the National Accounts, Paris, 2-3 July 2009

Outline AEG decision Permits issued by Government Trade, changes in value and surrendering Imports and exports Emission Reduction Units (JI) Certified Emission Reductions (CDM) Emission permits OECD-Eurostat Task Force

2008 System of National Accounts AEG decision Permits should be recorded as taxes Payments for permits are prepaid taxes Danish approach: Split the value of the permits in two assets 1) Prepaid tax (financial asset) 2) Difference to the market value (non-financial asset) 2) might be negative 1) + 2) is not negative Emission permits OECD-Eurostat Task Force

Permits issued and sold by the Government Two assets represents the value of the permit 1) Prepaid tax equal to the payment (financial asset) 2) Difference to the market value (non-financial asset) Non-produced non-financial asset created through OVC Assets are registered in the owners’ asset accounts A liability equal to the prepaid tax part of the split asset is registered in the Government accounts Emission permits OECD-Eurostat Task Force

Permits issued for free by the Government No payment Prepaid tax is zero The value of the non-produced non-financial asset corresponds to the market value of the permit Emission permits OECD-Eurostat Task Force

Trade with the permits and value changes If the permits are sold, both the financial asset (the prepaid tax part) and the non-financial asset part are sold Changes in the value of the non-produced non-financial asset are recorded in the revaluation account Emission permits OECD-Eurostat Task Force

Surrendering The asset, the liability, the prepaid tax, is settled as the emissions take place and the permits are surrendered (tax event) The remainder, the non-financial asset, disappears through OVC Assets related to the permits not surrendered before they expire are lost through OVC The tax part of the surrendered permit is registered as other taxes on production (D.29) Emission permits OECD-Eurostat Task Force

Imports and Exports When a permit containing an element of a prepaid tax is purchased from abroad then the purchase of the permit is divided into two parts: 1) The prepaid tax 2) The non-produced non-financial asset When the permit is surrendered abroad, this tax payment is recorded in the resident country, not in the country where it is surrendered Emission permits OECD-Eurostat Task Force

CERs and ERUs Certified Emission Reductions (CDM) Extends the cap. Therefore created through OVC Emission Reduction Units (JI) – Annex 1 countries Redistribution of the permits but no direct payment for the permits. Therefore created through OVC and not registered as acquisitions less disposals Emission permits OECD-Eurostat Task Force

Contact information Thomas Olsen, Statistics Denmark E-mail: Tol@dst.dk Emission permits OECD-Eurostat Task Force