Emission Trading permits and Tax

I’m pleased that Business Europe has made a submission to the OECD on this subject which I’ve uploaded onto the document section. I helped to get this issue onto the OECD agenda in 2009 and led the work which BIAC did in this field. It is an important field if Emission Trading is to be the preferred mechanism for carbon pricing. We made clear at the beginning of the project that differing tax treatments could facilitate tax arbitrage opportunities and that a common international framework made sense for this nascent market. The carousel fraud in the market served to underline this point. I’m pleased OECD has taken this forward.

I still have concerns that the treatment of Clean Development Mechanisms and the differing views of where value lies for transfer pricing, hence the annex to the submission. The current market price in the EU ETS is an issue, but it is for the EC to sort out the oversupply of permits if a higher price is desired. I will write shortly on the lack of consstency in the domestic treatment of permits.

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