Accounting for Emission Trading Schemes: A Still Open Debate

Emission allowances form the common trading currency introduced by the European Emission Trading Scheme to cover the emission of greenhouse gases. This initiative forces companies to internalise environmental expenses, so that it has an impact on accounting practices. The aim of this note is to discuss some alternative views on how to record this economic transaction, which could help the International Accounting Standards Board to find an accepted proposal. Adopting a common approach would always be preferable to the current situation characterised by total discretion. Indeed relying on the business model as proposed by the <italic>Autorité des Normes Comptables</italic> and the European Financial Reporting Advisory Group allows more discretion than imposing a solution based on the basic idea of the system: allowances are a trading currency.