Case law >> Contracts and ETS compliance

17th July 2012

Related Topics

Related tags

  • Water ,
  • Resource extraction ,
  • Engineering and metals ,
  • Electronics ,
  • Chemicals



Experts from LexisPSL analyse the High Court decision to award more than €4 million in compensation to a bank sold used EU ETS credits

In Deutsche Bank AG v Total Global Steel Ltd [2012] EWHC 1201 (Comm) the High Court held that the claimant was entitled to damages of €4,182,000 for the breach of four contracts for the delivery of certified emission reductions (CERs) under the EU emissions trading scheme (ETS).

CERs can be resold by ETS participants to third parties, such as investment banks, that participate in carbon markets through buying and selling EU greenhouse-gas emission allowances (EUAs) and other carbon credits, although they do not themselves have any obligations under the scheme.

Member states allocate EUAs to EU energy-intensive installations as part of the ETS, with each allowance equal to the emission of one metric tonne of CO2.

At the end of an ETS year, the operator of an installation must hold at least the same number of, or more, EUAs than the total volume of emissions from the facility. Companies with insufficient allowances can buy EUAs from those with a surplus to comply with their emissions limit.

To comply with its ETS obligations, a participating installation can also surrender other carbon credits – such as those offered through the UN’s Clean Development Mechanism and Joint Implementation projects.

In March 2010, Total Global Steel agreed four contracts to sell a total of 492,000 CERs to Deutsche Bank for €5,737,440. After realising that Total had delivered previously surrendered CERs, the bank wrote to the steel company stating that it had not performed the contracts properly because the delivered CERs could not be used for ETS compliance.

Deutsche requested that Total replace the surrendered CERs with ones that could be used for ETS compliance. Total did not deliver any further CERs.

Deutsche claimed that Total was obliged to deliver CERs that could be used for “compliance with emissions limitation commitments” in accordance with the ETS. Total disputed this.

The court calculated damages on the basis of the surrendered CERs’ value at 22 March 2012. This judgment will reassure the carbon markets and support the European Commission’s efforts to prevent surrendered CERs from being reused under the ETS.


Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.

Transform articles

Four in five shoppers willing to pay ‘sustainability premium’

Despite cost-of-living concerns, four-fifths of shoppers are willing to pay more for sustainably produced or sourced goods, a global survey has found.

16th May 2024

Read more

One in five UK food businesses are not prepared for EU Deforestation Regulation (EUDR) coming into force in December, a new survey has uncovered.

16th May 2024

Read more

Each person in the UK throws a shocking 35 items of unwanted clothes and textiles into general waste every year on average, according to a new report from WRAP.

2nd May 2024

Read more

The largest-ever research initiative of its kind has been launched this week to establish a benchmark for the private sector’s contribution to the UK’s 2050 net-zero target.

2nd May 2024

Read more

Weather-related damage to homes and businesses saw insurance claims hit a record high in the UK last year following a succession of storms.

18th April 2024

Read more

The Science Based Targets initiative (SBTi) has issued a statement clarifying that no changes have been made to its stance on offsetting scope 3 emissions following a backlash.

16th April 2024

Read more

One of the world’s most influential management thinkers, Andrew Winston sees many reasons for hope as pessimism looms large in sustainability. Huw Morris reports

4th April 2024

Read more

Vanessa Champion reveals how biophilic design can help you meet your environmental, social and governance goals

4th April 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close