CO2 emission rights granted free of charge under the National Allocation Plan (Krajowy Plan Rozdziału Uprawnień) and additional CO2 emission rights purchased for the purpose of redemption, i.e. fulfilling the CO2 emission settlement obligation, are presented as current intangible assets which are not amortized but tested for impairment and are presented separately in current assets.
CO2 emission rights granted free of charge for the given financial year are recognized at nil cost.
CO2 emission rights purchased are measured at acquisition price less any impairment loss.
CO2 emission rights are registered in the following groups:
- green CER,
- free-of-charge and purchased EUA.
Within the above mentioned groups, costs are recognized according to FIFO (first in, first out) method. As regards CO2 emissions associated with the electricity production process, the Group is obliged to settle them through presentation of a specified quantity of CO2 emission rights for redemption. The costs related to fulfilling the aforementioned obligation are recognized in the accounting records systematically throughout the annual reporting period, in proportion to the actual and planned volume of production of electricity.
A provision is created for estimated CO2 emissions during the reporting period, and charged to costs of operating activities. The amount of the provision, presented in the statement of financial position within liabilities, is determined in compliance with the following rules:
- the amount recognized as a provision should be the best estimate of the expenditure required to settle, in annual periods, the present obligation at the reporting date,
- first, the provision is established on the basis of the value of emission rights owned on the reporting date,
- if the demand for emission rights is not covered by the quantity of owned rights, a provision is established for the volume of uncovered estimated emissions, on the basis of the purchase prices of emission rights as specified in forward contracts made (if the delivery date is set before the date of actual settlement of the obligation, i.e. redemption of emission rights),
- if the demand for emission rights is not covered by the quantity of emission rights owned, due and purchased on forward date, then a provision is established for the volume of uncovered estimated emissions, on the basis of market quotes (Bluenext) as at the reporting date.
The liability (provision) due to CO2 emission is settled through redemption of emission rights.
Sales revenues and the cost of CO2 emission rights sold are presented in operating income and costs, respectively.
The value of the emission rights sold is determined according to FIFO in the given group of emission rights:
- green CER,
- free-of-charge and purchased EUA.