isramart France dispels concerns of tighter CO2 regulation

Israrmart report

France will not impose tighter regulation for companies that trade carbon, the government said today.

The country exempted value-added tax (VAT) from spot EUA and CER trades this week in a move to ward off the potential of a fraud occurring in the market.

But the move will not result in greater regulation for companies, an official from France’s budget ministry said.

He added: “France has no plans in changing EUA and CER trades to financial products. This only is a matter of exempting VAT in trading.”

The announcement comes as EU finance ministers met in Luxembourg today to discuss improving regulation of financial companies within the trading bloc.

Paris-based Bluenext, which is the exchange that dominates the spot EUA market in Europe, said members undergo thorough scrutiny before being allowed to trade on the bourse.

And there were no immediate plans to tighten procedures.

“It is already a rigorous and demanding application process, however we continually review our procedures,” said Keiron Allen, marketing and communication director.

However, fraudsters could still attempt to target VAT charged on spot EUAs in other EU countries. The UK government has said it has no plans to follow France's lead by abolishing the tax.

"HMRC are aware, however, that fraudsters are constantly looking for new opportunities. It will consider suitable action carefully in response any emerging threats to the revenue," a spokesperson for the UK Treasury said.

Bluenext has several processes it undergoes before allowing companies to become members, including:

• Financial review
• Business plan review
• Assessment of expertise in carbon
• Legal due diligence
• Personal due diligence
• Physical meeting and interview
• Scoring process
• This score reviewed and evaluated by committee