The Treasury has released draft amendments to the Corporations Regulations and ASIC Regulations towards regulating Australian Carbon Credit Units (ACCUs) and Eligible International Emissions Units (EIEUs) as financial products.

The proposed amendments will modify the financial products regime so that it fits the unique characteristics of the credits and avoids unnecessary compliance costs associated with disclosure obligations to retail clients.

The most significant news in this release is a seven month transitional period to the financial services licensing requirements commence. This aligns with the start dates of the Carbon Farming Initiative and carbon price mechanism of July 2012.

How will this affect me?

While the legislation and regulation is still unfolding and much of the detail is still to come, it is clear advisors and traders will be required to hold an Australian Financial Services Licence (AFSL).

Seven months is not a lot of time to prepare for licensing. Our experience assisting businesses obtain an AFSL is it typically take 3-6 months to prepare for licensing and ASIC can take from 6 weeks to several months to approve AFSL applications.

The lesson is you need to start preparing now.

AFSL applications and variations

Advisors and traders currently holding AFSLs should also take note that ACCUS and EIEUs are being classified as investment based financial products. Investment based financial products include securities, government securities and managed investment schemes. This means existing AFSL holders should be prepared to vary their current AFSL product authorisations to include ACCUs and EIEUs.

Existing AFSL holders with wholesale client only authorisations should also consider whether their potential client base for ACCUs and EIEUS will include retail clients. If so, you may need to vary your AFSL client authorisation and implement new procedures for dealing with retail clients.

How can we assist?

Certainty Compliance has extensive experience in the energy and renewable sector assisting businesses obtain AFSLs and manage their ongoing obligations. We welcome you to contact us to discuss how these requirements apply to your business on 02 8324 5300 or

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Details of draft amendments

ACCUS and EIEUs will be defined as an investment based financial product effective at the end of a seven month transition period from when the regulation is passed.

The financial services disclosure provisions of Part 7.7 of the Corporations Act will apply to ACCUs and EIEUs with the following modification to s949A(2)(c).

  • The general advice warning to retail clients relating to the acquisition or possible acquisition of an ACCUs or EIEUs must also include the website address of the Carbon Credits Administrator and inform the client that they should consider each statement mentioned in s162 of the Carbon Credits (Carbon Farming Initiative) Act (for ACCUs) or s61 of the Australian National Registry of Emission Units Act 2011 (for EIEUs).
  • In personal advice situations, a Product Disclosure Statement will not be required for ACCUs and EIEUs. However, the provider must inform the client that the client should consider each statement mention in s162 of the Carbon Credits (Carbon Farming Initiative) Act (for ACCUs) or s61 of the Australian National Registry of Emission Units Act 2011 (for EIEUs) unless the provider believes on reasonable grounds that the client has already considered each statement published on the Carbon Credits Administrator’s website.

Anti-hawking provisions of the Corporations Act will apply to ACCUs and EIEUs and s992A(3)(c),(d) and (e) will be modified to require the provider to inform the client that the person should consider all the information about the financial product published on the website of the Carbon Credits Administrator before becoming bound to acquire a financial product and be clearly informed of the importance of using that information when making a decision to acquire a financial product; and to be given the option of having that information read out to the person.

The handling client monies provisions of s1017E will apply to applications to acquire ACCUs or EIEUs.

Dispute resolution requirements of s1017G will apply to providers to retail clients.

Advertising or other promotional material for ACCUS and EIEUs likely to be become available to retail clients must identify the issuer (or issuer and seller), refer to statements on Carbon Credits Administrator’s website and inform the person that they should consider these statements before deciding whether to acquire or continue to hold these products.


On 23 August 2011, the Carbon Farming Initiative was passed and created a scheme for creating carbon credits in the agricultural sector. It establishes a scheme under which landholders (including farmers and forestry) may establish carbon abatement and sequestration projects that generate tradeable carbon credits. In September 2011, the Australian National Registry of Emissions Units Act was passed and the Carbon Credits Administrator will manage the registry functions for the Kyoto Protocol units and for the ACCUs created under the Carbon Farming Initiative from July 2012.

On 8 November 2011, the Australian Government passed the Clean Energy law package of legislation. This provides a carbon price mechanism to put a price on greenhouse gas emissions. Certain entities that emit greenhouse gas emissions or purchase or supply emissions or energy intensive goods or services will be required to surrender carbon units to cover those emissions. The scheme will commence on 1 July 2012 with an initial three year fixed price period that will transition to a flexible price cap and emissions trading scheme on 1 July 2015. The Clean Energy Regulator will administer the carbon pricing mechanism.

ACCUs and EIEUs (as well as Kyoto Protocol Units and other tradeable carbon credits issued under international agreements) will be defined as financial products under proposed changes to the Corporations Act s764A(1)(ka) and ASIC Act s128BAA(7)(l). As a result, the financial services obligations such as licensing, disclosure and market conduct (including insider trading) will apply. The anti-money laundering regulatory obligations under the AML/CTF Act will be extended to these instruments.

Entities that wish to trade in ACCUs and EIEUs will typically be required to hold an Australian Financial Services Licence. While trading is likely to be limited during the fixed price phase, carbon units for the floating price phase will be auctioned during the fixed price phase, with the aim of creating a forward price curve. Accordingly, potential traders should consider applying for the necessary licence (or a modification of their existing licence if required) in preparation of the commencement of the carbon pricing scheme.

The content on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.