Accounting for Emissions Trading: How Allowances Appear on the Financial Statements Could Influence the Effectiveness of Programs to Curb Pollution
30 Pages Posted: 20 Sep 2011
Date Written: September 20, 2011
Abstract
Cap-and-trade programs to curb carbon emissions frequently rely on the use of tradeable emissions credits known as "allowances." To date, companies' presentations of their usage of these allowances on their financial statements has not been uniform. Cap-and-trade programs will be most effective when presentation of allowances on financial statements is standardized, since all companies will be forced to be transparent about their methods of compliance with carbon emissions trading systems. Therefore, the FASB and the IASB should implement standards for the presentation of allowances on the financial statements.
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