1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. Contact information
Thomas Olsen, Statistics Denmark
Emission permits OECD-Eurostat Task Force