International emissions units are used to measure and trade reductions in greenhouse gas emissions on a global scale. We enable the trading and cancellation of these units in Australia through the Australian National Registry of Emissions Units (ANREU).

The ANREU was designed to meet Australia's commitments under the Kyoto Protocol. It provides a platform to trade the 3 main types of international emission units established through the Kyoto Protocol:

  • certified emissions reduction units
  • emissions reduction units
  • removal units.

The ANREU also links with the international carbon market through the International Transaction Log, which is managed by the United Nations Framework Convention on Climate Change Secretariat. This link ensures all Kyoto unit transactions are verified and valid.

The Kyoto Protocol second commitment period has now ended. The ANREU will continue to support the secondary market in Certified emission reduction units while the Clean Development Mechanism transitions under Article 6 of the Paris Agreements.

Certified emission reduction units (CERs)

Under the Clean Development Mechanism, emission reduction projects in industrialised countries can earn CERs. Each CER represents one tonne of carbon dioxide-equivalent (tCO₂-e) emissions abated or sequestered. 

Each CER has a unique serial number that identifies the:

  • unit as a CER
  • Kyoto party that issued it
  • Kyoto commitment period it was issued for
  • CDM project number of the CER.

CERs are only valid for the commitment period for which they are issued.

Individuals, companies or organisations can buy CERs through:

Relevant legislation: Section 4 of the ANREU Act.

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:

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:

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.

Emission reduction units (ERUs)

ERUs are issued for projects registered under the Kyoto Protocol joint implementation (JI) mechanism. ERUs are issued to a country that has helped reduce emissions or enhance carbon sequestration in another country. Like CERs, each ERU represents one tonne of CO₂ reduced.

Each ERU has a unique serial number. It identifies the:

  • unit as an ERU
  • Kyoto Party that issued it
  • Kyoto commitment period it was issued for
  • JI project number.

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:

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:

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).

Removal units (RMUs)

RMUs are issued either in or outside Australia for emissions stored or avoided through eligible human induced land use, land-use change, and forestry (LULUCF) activities, such as reforestation, under the United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol. Each RMU represents one tonne of CO₂ removed from the atmosphere.

Each Annex I Party has different national policies about the type of activities which are eligible for the creation of RMUs and the procedure for issuing RMUs.

Each RMU has a unique serial number that identifies the:

  • unit as an RMU
  • Kyoto party that issued it
  • Kyoto commitment period for which it was issued
  • the ACCU or Kyoto project number
  • the year of issue.

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:

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.

Disclaimer

This is a statement setting out a concise description of the characteristics of Certified Emission Reductions (CERs), except temporary Certified Emission Reductions and long-term Certified Emission Reductions, Emission Reduction Units (ERUs) and Removal Units (RMUs). This statement is published, and will be kept up-to-date, under section 61 of the ANREU Act. It is not a Product Disclosure Statement within the meaning of Part 7.9 of the Corporations Act 2001.

This statement is general in nature and does not apply to any particular situation, transaction or organisation. It is not legal or financial advice. You should seek your own legal or financial advice with particular reference to your own circumstances and requirements. This statement does not provide specific information or advice concerning, among other things, the detailed characteristics of CERs, ERUs, RMUs, or the costs associated with them, their legal status, their taxation treatment and the potential benefits and risks of dealing in them.

Neither the Commonwealth of Australia nor the Clean Energy Regulator, nor any of their officers or related bodies, make any representation as to the future nature, characteristics or performance of CERs, ERUs or RMUs. Nor can they provide any specific advice concerning CERs, ERUs or RMUs. You may obtain professional advice from a person who holds an Australian Financial Services Licence (AFS licence) that authorises them to provide financial advice in relation to CERs, ERUs or RMUs or is exempt from the requirement to hold an AFS licence for this purpose. You can visit the ASIC website to search the register of AFS licensees or visit the Money Smart website for more information on obtaining professional financial advice.

Note that any financial product which is related to or associated with a CER, ERU or RMU such as a derivative or a managed investment scheme, may require a Product Disclosure Statement to be provided by the person offering or recommending that financial product.