# ASC 818-30-30: Environmental Credits and Environmental Credit Obligations — Environmental Credit Obligations — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/818/30/#30-initial-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:354e9239087e9928d5cd0d7850294dd132d20d9800963acd632a2cad73fbd4d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/818/30/#30-initial-measurement) SEC content: no ##### [818-30-30-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:659b91b981faf5929c48c556fbfd99b58c213887b86821fc532bddecc0c253b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall apply the recognition and measurement requirements of Subtopic 818-20 before applying the measurement requirements of this Subtopic on [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(P) December 16, 2027; (N) December 16, 2028818-10-65-1A regulatory compliance obligation arising from existing or enacted laws, statutes, or ordinances represented to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Obligations within the scope of Subtopic 410-30 are not environmental credit obligations."). An environmental credit obligation liability may have a funded portion and an unfunded portion to be measured in accordance with paragraphs [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) and [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3), respectively. ##### [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:3903381e026e4abe6b69740ea2d3d8655d082320fc707509f38b5d04dc46c420 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The funded portion of an environmental credit obligation liability is the portion for which an entity has associated [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 and probable of being used to settle an environmental credit obligation."). An entity shall measure the funded portion using the carrying amount of the compliance environmental credits expected to be derecognized upon settlement of the liability using costing methods consistent with those applied when subsequently measuring its compliance environmental credits in accordance with Subtopic 818-20. When measuring the funded portion of an environmental credit obligation liability, an entity shall not consider any of the following: 1. a [Noncompliance environmental credits](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 that is not a compliance environmental credit.") 2. b [Environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets.") that were never recognized as assets in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) 3. c Environmental credits that were previously derecognized in accordance with paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2). ##### [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:7eeaf858a358e485695936caada42af452eaf97eeb08c0eeaf3c77f49216b27a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)If an entity does not have sufficient compliance environmental credits to satisfy an environmental credit obligation liability at a reporting date, the unfunded portion of its environmental credit obligation liability shall be measured using the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the environmental credits necessary to settle that portion of the liability at the reporting date, unless an entity intends to settle (or partially settle) the unfunded portion by remitting any of the following: 1. a Cash. An entity that intends to settle the unfunded portion by remitting cash shall measure the unfunded portion using the cash settlement amount specified by the regulatory compliance program. 2. b Environmental credits that will be received before the settlement of the liability from either an existing unconditional purchase commitment for a fixed quantity of environmental credits at a fixed price or an unconditional right to receive a fixed quantity of environmental credits as part of a regulatory compliance program or contract for which environmental credits will be received as consideration. For purposes of applying the requirements in this paragraph, an unconditional right exists when an entity has satisfied all performance requirements of the regulatory compliance program or contract necessary to receive environmental credits as of the reporting date. An entity that intends to settle the unfunded portion using environmental credits from those unconditional commitments or rights shall measure the unfunded portion using the estimated cost basis of the environmental credits to be obtained (which may differ from the fixed price per the contract). ##### [818-30-30-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:8bd36cf9b2d61d7407937fa4fdbe82a996a1bb64dbc48b402b50dcfaad93bb0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall not consider expected future activities that may increase, reduce, or eliminate its environmental credit obligation liability when applying paragraph [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3). ##### [818-30-30-5](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:35a778c6c204e12354e48b00c149834920b9edf5b6c8b9e4a92ec236357b826a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraphs [818-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-5) for implementation guidance on the application of initially measuring environmental credit obligation liabilities.