PROJECT UPDATE

Accounting for Environmental Credit Programs

Last updated on June 1, 2022. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Sections updated on the date above are indicated with an asterisk *)

 

Objective:


The objective of this project is to improve the recognition, measurement, presentation, and disclosure requirements for participants in compliance and voluntary programs that result in the creation of environmental credits and for the nongovernmental creators of environmental credits.

Background:


On December 15, 2021, in response to feedback received on the Invitation to Comment, Agenda Consultation, FASB Chair Rich Jones added a project to the FASB research agenda to explore the accounting for regulatory credits. On May 25, 2022, the Board added a project to its technical agenda to improve the recognition, measurement, presentation, and disclosure requirements for participants in compliance and voluntary programs that result in the creation of environmental credits and for the nongovernmental creators of environmental credits.

Exposure Draft(s):

There are no exposure documents at this time.

There are no media releases or educational materials at this time.

Decisions Reached at Last Meetings (May 25, 2022):


The Board added a project to the technical agenda on the recognition, measurement, presentation, and disclosure requirements for participants in compliance and voluntary programs that result in the creation of environmental credits. These credits include (but are not limited to):

  1. Those created under compliance programs, such as cap and trade and baseline allowance programs
  2. Renewable energy credits/certificates
  3. Renewable identification numbers
  4. Carbon offset credits.
Additionally, the project includes financial reporting requirements for nongovernmental creators of environmental credits. The Board decided that the preliminary scope of the project is environmental credits that are legally enforceable and can be traded. The Board also decided that the scope of the project excludes the accounting for tax credits, tax incentives, or investments in renewable energy structures or entities (such as partnerships).

The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

The following are links to the minutes for each meeting.  To view Board meetings and handouts from the past 90 days, click here.
 
May 25, 2022 Board Meeting—The Board added a project to its technical agenda to improve the recognition, measurement, presentation, and disclosure requirements for participants in compliance and voluntary programs that result in the creation of environmental credits and for the nongovernmental creators of environmental credits.

The Board will consider potential accounting alternatives at a future Board meeting.

Chris Roberge
Senior Project Manager
ceroberge@fasb.org

Michael Lupo
Project Manager
mlupo@fasb.org

Matthew Shea
Postgraduate Technical Assistant
mshea@fasb.org

The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
 

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