You can see the hamster.
Probably the best way—and I'm trying to think of the clearest way to answer that question—is to go through how the rules work and also, somewhat, how they address the current issues, because they were intended to be put in to clarify and provide rules for the taxation of emissions allowances.
Right now all we have are somewhat general tax principles. There are no specific rules in the Income Tax Act saying how to treat them nor, as I understand, are there any accounting principles. Beyond the obvious uncertainty problem, there is a real issue of double taxation that can arise. If you, for example, receive a free emissions allowance from the government, that could be taxable, and then you could be taxed again when it's used to satisfy an emissions obligation.
What the rules essentially do, through kind of a rolling balance mechanism, is they treat emissions allowances as inventory, as you said. That means that the purchase and sale of them is an income account. They're held as inventory, although they're not able to use the lower of cost or market rule, as some other types of inventory property could.
When they're received, they're held at their cost, and to the extent they can be used to satisfy emissions allowances, you can get a deduction. If they're not used in that year, then in the following year you get an inclusion and then another deduction for when they are used. This cycle of inclusions and deductions ensures that you can accrue the deduction not just in the year you get it but until it's used.
Last, I'll talk about the disposition, when you give up one of these emissions allowances to satisfy your obligations under an emissions regime. It's not when you sell it to a third party if you're a trader or what not, but it's when you give it up to satisfy your obligations under one of these regimes. Then there's no gain or loss on the satisfaction of it. It allows you to deduct, in essence, your cost accrued year to year until ultimately it's used to satisfy an obligation.