From July 1, 2012, carbon units issued for the purposes of the government’s carbon price legislation are personal property under the Personal Property Securities Act 2009 (PPSA). Accordingly, emissions units will constitute property capable of securing loans and other interests.
Carbon emissions units will be issued by the Clean Energy Regulator and recorded electronically in the Australian National Registry of Emissions Units. Through notice to the regulator, the units may be transferred, cancelled or otherwise dealt with by the registered holder of the units.
The suite of legislation introduced for the purposes of carbon pricing expressly state that emissions units are personal property for the purposes of the PPSA. This status imports the PPSA’s priority rules for determining rights to property when competing interest holders have claims to the same property.
To ensure the fullest security is held over charged emission units, the security must be ‘attached’ and ‘perfected’ in accordance with the PPSA rules. Unperfected interests in emission units will, if the grantor goes into liquidation or bankruptcy, vest in the grantor and thus be available in the pool of assets distributable by the liquidator or trustee.