The basic principles of emissions trading are based on an economic theorem by Ronald Coase (Coase theorem). This theorem assumes that participants in a market can manage external costs if they can negotiate the allocation of resources and exchange them without incurring costs.

From this, the economist J.H. Dales developed the basic idea of emissions trading by proposing the establishment of a market for pollution rights. This approach enabled politicians to set a concrete upper limit on pollution for the first time. In emissions trading, pollution rights correspond to emissions certificates, with one certificate entitling the holder to emit 1 metric ton of CO2 equivalents. The price of the certificate is determined by the market.

Liechtenstein allocates certificates to the plant operators covered by the Emissions Trading Directive, the quantities of which are significantly lower than the actual planned emissions (reduction target). The operators are free to implement reduction measures themselves or to purchase the missing emission allowances on the market. Emission reduction measures are therefore implemented where they are most cost-effective. Emissions trading creates incentives to invest in CO2 - saving technologies and thus gives companies more flexibility to achieve their targets. Overall, the costs for all companies involved in the system are reduced.

In addition, a new market is created for traders in emission allowances, experts and other service providers.

Within the framework of the Kyoto Protocol and the Emissions Trading Directive, a distinction can be made between 8 different so-called emission rights. They are characterized by their origin, their eligibility for the reduction target and their transferability to subsequent commitment periods. EU Allowances (EUAs), which are allocated to plant operators by the state, are referred to as emission certificates. Certificates from projects in developing countries (CDM) or from other industrialized countries (JI) are referred to as emission credits. The table below provides an overview of which emission allowances can be credited in which system. All emission allowances are freely tradable in all systems.

Table 1: Detailed information on emission allowances; modified according to the Federal Office for the Environment (FOEN).

Definitions of emission allowances

EUA: EU Allowances - emission allowances allocated to the companies covered by Annex 1 of the Emissions Trading Directive. The allocation of emission allowances to the individual companies is carried out via the Union Registry of the respective EU/EEA member state.

AAU: Assigned Amount Units - emission allowances allocated to individual countries for a commitment period under the Kyoto Protocol. The quantity of AAUs allocated depends on the emissions target that the countries must achieve in the corresponding commitment period. In the Swiss system - analogous to the EU ETS - AAUs are passed on to Liechtenstein companies with reduction commitments under the CO2 Act.

RMUs: Removal Units - emission allowances that can be generated in addition to AAUs as a result of an increase in national sink performance. As sinks do not contribute to permanent CO2 reduction, RMUs are invalidated at the end of the commitment period.

ERU: Emission Reduction Units - emission credits generated from the realization of Joint Implementation (JI) projects between two industrialized countries.

CER : Certified Emission Reductions - emission credits generated from the implementation of CDM projects by industrialized countries in developing countries.

tCER: Temporary CER - is an emission credit issued for a CDM project as part of an afforestation or reforestation project. tCERs expire at the end of the next commitment period and may be renewed as long as the sequestration of CO2 stored in forests can be proven using defined procedures.

lCER: Long-term CER is an emission credit that is issued for a CDM project as part of a CDM afforestation or reforestation project. lCERs expire at the end of the entire project period and therefore cannot be renewed. However, they must be replaced by other emission credits if proof of CO2 sequestration is not provided every five years.

Any natural or legal person is entitled to apply for an account in the Union Registry in one of the Member States. The account is opened if all EU and member state requirements are met.

All information and documents (legal basis, application form) for opening an account in the Liechtenstein Union Registry can be found on our homepage. You can find the Liechtenstein Union Registry at www.emissionshandelsregister.li

To open an account in the Liechtenstein Union Registry, every applicant must submit a correctly completed application form (including all required documents) to the Office for the Environment electronically.

After thorough verification of all data and documents, the applicant and all authorized representatives will receive their personal activation key by registered mail. This key is necessary to gain access to the secure area of the Union Registry.

According to Article 16, para. 3 of the Emissions Trading Act, a third authorized representative with permanent residence in Liechtenstein is mandatory for opening an account in the Liechtenstein Union Registry. Possible candidates can be found under:

In accordance with Art. 14 para. 3 of the Emissions Trading Act (EHG), emission allowances are allocated to the accounts of installation operators by the registry administrator by February 28 of the relevant year at the latest.

A transaction is defined as any national or international transfer of emission allowances between two communicating accounts. This includes the surrender and cancellation of emission allowances.

By April 30 of the following year (Art. 15 Para. 1 EHG), an installation operator must submit emission rights (emission certificates and max. 8% emission credits) to the Office for the Environment in the amount of the emissions shown and verified in the emissions report.

The Liechtenstein Union Registry fulfills the security requirements of the EU and the UN and offers 6 security levels. You can find out more about this in our security provisions on this website under Menu Union Registry. Of course, the Union Registry also uses the SSL (Secure Socket Layer) security protocol. SSL guarantees that you are actually connected to the Union Registry server and also enables secure and confidential data transfer via a 128-bit code.