International units

The CDM is governed by the CDM Executive Board. After emissions reductions are verified, CERs are issued into the project participant's CDM Registry account or a national registry such as the ANREU, via the International Transaction Log (ITL).

Each CER has an electronic entry in the ANREU account it's held in.

If we become aware of any defect in the registered holder's title to a CER, we may correct the entry in ANREU. For example, if the CER was entered in the registered holder’s account in error or because of fraudulent conduct.

A CER held in an ANREU account is personal property for the purposes of:

• chapter 5 of the Corporations Act 2001
• Bankruptcy Act 1966
• the law relating to wills, intestacy and deceased estates
• the Personal Property Securities Act 2009
• Proceeds of Crime Act 2002.

The ANREU Act does not prevent the creation or enforcement of, or any dealings with, equitable interests in CERs. It may be possible for the holder of a CER in ANREU to grant security over (for example, to mortgage) the CER or hold the CER on behalf of others under a trust or other beneficial ownership arrangement.

More information on taking security over CERs is available on the Australian Government’s Personal Property Securities Register website.

Under Australian law, you can trade CERs. You should obtain your own professional advice about trading CERs having regard to your own situation.

A CER is a ‘financial product’ under the:

• Corporations Act 2001
• Australian Securities and Investments Commission Act 2001.

This means that people who provide financial services for CERs and related products in Australia may need an AFS licence.

Buying and selling CERs on behalf of another person will also be a ‘designated service’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The service provider will have to report suspicious matters or transactions above a specified limit. Except in special cases, the service provider will also have to verify their customer’s identity before trading in CERs.

The value of CERs is determined by the market and may go up or down. A wide range of factors will influence the value, including:

• availability and type of CDM projects
• changes to the international climate change framework
• Australian legislation.

Neither the Commonwealth of Australia or the Clean Energy Regulator, nor any of their officers or related bodies, make any representation or provide any guarantee concerning the future value of CERs.

You can only transfer a CER within Australia between ANREU accounts. CERs can no longer be transferred from an ANREU account into a foreign account in a foreign national registry or the CDM registry.

We may restrict transfers within ANREU to ensure the integrity of ANREU, prevent, mitigate or minimise abuse of the ANREU or prevent, mitigate or minimise criminal activity involving ANREU.

CERs can be voluntarily cancelled in the ANREU. The cancellation of a CER will be verified by the International Transaction Log.

You should obtain your own professional advice about the tax treatment of CERs having regard to your own situation.

Generally, the following applies to CERs:

• The cost of acquiring a CER is tax deductible. The deduction is deferred through the rolling balance method until the year when the CER is sold.
• The proceeds of selling a CER are assessable income on revenue account in the income year the CER is sold.
• Supplies of CERs (that are not temporary CERs or long-term CERs) are GST-free.
• Sellers of CERs are deemed to have received market value for a CER in some cases. For example, in transactions between related entities.

JI allows an industrialised country party (and entities approved by an industrialised country party) to:

• invest in emission reduction or removal projects (JI projects) hosted in another industrialised country party
• receive ERUs corresponding to the volume of sequestered or abated carbon dioxide-equivalent (CO₂-e) achieved by JI projects.

ERUs are issued to the JI project participant by the industrialised country party that is the host of the JI project. Each party has different national policies about the type of JI projects that they will host and the procedures for issuing ERUs.

Usually, after verifying emission reductions, a host country will direct its national emissions registry (like ANREU) to convert either assigned amount units (AAUs) or removal units (RMUs) held in ANREU to ERUs. The ERUs will be equal to the abatement or sequestration generated by the JI project. ERUs are transferred to the participants in a JI project when the host country converts an AAU or RMU to an ERU. This ensures that emissions abatement or sequestration achieved through the JI project is only counted against one party's target.

Find out more about joint implementation on the UNFCCC website.

Each ERU has an electronic entry in the ANREU account it's held in.

If we become aware of any defect in the registered holder's title to an ERU, we may correct the entry in ANREU. For example, if the ERU was entered in the registered holder’s account in error or because of fraudulent conduct.

Only ERUs converted from AAUs can be carried over. This is in accordance with the Kyoto rules. ERUs converted from RMUs must be cancelled at the end of the commitment period they were issued in.

An ERU held in an ANREU account is personal property for the purposes of:

• chapter 5 of the Corporations Act 2001
• the Bankruptcy Act 1966
• the law relating to wills, intestacy and deceased estates
• the Personal Property Securities Act 2009
• the Proceeds of Crime Act 2002.

The ANREU Act does not prevent the creation or enforcement of, or any dealings with, equitable interests in ERUs. It may be possible for the holder of an ERU in ANREU to grant security over (for example, to mortgage) the ERU or hold the ERU on behalf of others under a trust or other beneficial ownership arrangement.

More information on taking security over ERUs is available on the Australian Government’s Personal Property Securities Register website.

Under Australian law, ERUs can be traded. You should obtain your own professional advice about the trading of ERUs having regard to your own situation.

An ERU is a ‘financial product’ under the:

• Corporations Act 2001
• Australian Securities and Investments Commission Act 2001.

This means that people who provide financial services for ERUs and related financial products and services in Australia may need an AFS licence.

Buying and selling ERUs on behalf of another person will also be a ‘designated service’ for the purposes of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The service provider will have to report suspicious matters or transactions above a specified limit. Except in special cases, the service provider will also have to verify their customer’s identity prior to trading in ERUs.

The value of ERUs is determined by the current and future markets for them and may go up or down. A wide range of factors will influence the value. This includes availability and type of JI projects and changes to the international climate change framework and Australian legislation. Neither the Commonwealth of Australia, the Clean Energy Regulator, nor any of their officers or related bodies, make any representation or provide any guarantee concerning the future value of ERUs.

You can transfer an ERU (for instance, where it has been traded) within Australia only between accounts in ANREU.

We may restrict transfers within ANREU to ensure the integrity of ANREU, prevent, mitigate or minimise abuse of ANREU or prevent, mitigate or minimise criminal activity involving ANREU.

ERUs are valid for the commitment period in relation to which they were issued.

You should obtain your own professional advice about the tax treatment of ERUs having regard to your own situation.

Generally, the following applies to ERUs:

• The cost of acquiring an ERU is tax deductible, with the deduction effectively being deferred through the rolling balance method until the year in which the ERU is sold.
• The proceeds of selling an ERU are assessable income on revenue account in the income year the ERU is sold.
• Supplies of ERUs are GST-free.
• Sellers of ERUs are deemed to have received market value for an ERU in certain circumstances (for example, transactions between related entities).

Each RMU has an electronic entry in the ANREU account it's held in.

If we become aware of any defect in the registered holder's title to an RMU, we may correct the entry in ANREU. For example, if the RMU was entered in the registered holder’s account in error or because of fraudulent conduct.

An RMU held in a ANREU account is personal property for the purposes of:

• chapter 5 of the Corporations Act 2001
• the Bankruptcy Act 1966
• the law relating to wills, intestacy and deceased estates
• the Personal Property Securities Act 2009
• the Proceeds of Crime Act 2002.

The ANREU Act does not prevent the creation or enforcement of, or any dealings with, equitable interests in RMUs. It may be possible for the holder of a CER in ANREU to grant security over (for example, to mortgage) the CER or hold the CER on behalf of others under a trust or other beneficial ownership arrangement.

More information on taking security over CERs is available on the Australian Government’s Personal Property Securities Register website.

Under Australian law, RMUs can be traded. Before trading in RMUs, you should obtain your own professional advice which takes into account your own situation.

A RMU is a 'financial product' under the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. This means that people who provide financial advice in relation to RMUs and related financial products and services may require an Australian financial services licence which authorises them to provide those services.

Buying and selling RMUs on behalf of another person will also be a 'designated service' for the purposes of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. This means that the service provider must report suspicious matters or transactions above a specified limit. Except in special cases, the service provider must also verify their customer's identity prior to trading in RMUs.

The value of RMUs is determined by the current and future markets and their price may fluctuate. The value will be influenced by a wide range of factors including, but not limited to, changes to the international climate change framework and relevant legislation. Neither the Commonwealth of Australia or the Clean Energy Regulator, nor any of their officers or related bodies, can provide any guarantee on the future value of RMUs.

You can transfer an RMU (for instance, where it has been traded) within Australia only between accounts in ANREU.

There are some restrictions on transferring RMUs between accounts:

• We must not give effect to an instruction to transfer an ERU to or from a foreign account if the International Transaction Log notifies us that there is a discrepancy with the instruction to transfer or the proposed transfer has been rejected or cancelled.
• We must not give effect to an instruction to transfer an ERU from an ANREU account to a foreign account or the voluntary cancellation account where this would mean that Australia breached its commitment period reserve (that is, the transfer would result in the total number of Kyoto units, including RMUs, held in ANREU falling below the minimum number that the Kyoto rules require that Australia hold in ANREU).
• We may restrict transfers within ANREU to ensure the integrity of ANREU prevent, mitigate or minimise abuse of ANREU or prevent, mitigate or minimise criminal activity involving the ANREU.

The Kyoto rules include some restrictions on carry-over of RMUs from the first to subsequent commitment periods. Regulations made under the ANREU Act could provide for cancellation of RMUs for which carry-over is not permitted. No regulations have yet been made.