2011/01/22

FT Alphaville » In pursuit of 475,500 stolen European Union Allowances

If you thought illiquid European sovereign markets weren’t enough of a problem — time now to familiarise yourselves with the latest trading quagmire to hit Europe.

On Wednesday, the European Union was forced to suspend transfers of its carbon units, known as European Union Allowances (EUAs), after it transpired that yetmore contracts had been stolen from national registry accounts. The Czech Republic’s, in this case.

This, of course, is not the first time the European Union Emissions Trading Scheme (ETS) has been rocked by such a scandal.

Others have included VAT fraud, a phishing scam and even the re-sale of used carbon credits.

The competent registration of units, though, is especially essential to making the scheme work — since carbon permits are a synthetic market with no natural supply or demand fundamentals of their own. Supply is stagnant and determined by countries’ National Allowance Plans, themselves negotiated bitterly over many months between governments and the European Commission.

If the NAPs (based on pollution quotas) have been mis-assessed, say over-estimated — demand for the units is likely to be limited with a price collapse a very possible consequence. This, by the way, is exactly what happened during the first round of the scheme.

The systematic theft of units, consequently, can lead to the same thing, since all it does is pump more (illegal) supply into the closed-end structure.

Now the theft could just be sabotage. After all, we imagine, there are plenty of people who might want to see the scheme fail. If it isn’t though, it suggests there are some amazing lengths countries and corporates are prepared to go to so as to con the system.

For example, Point Carbon (PC), a specialist information firm that focuses on the market, on Thursday provided some very interesting colour — including the possibility that a bomb scare was involved in fronting the theft:

An official with the Czech emissions registry confirmed it had received a formal complaint from an account holder about an EUA transfer that the company did not initiate. “It looks to be a different method from a simple phishing attack seen before… it is very serious,” said Miroslav Rehor with the Czech registry, adding that the missing EUAs had been transferred to an account in Poland. He said that Czech registry’s headquarters had been evacuated for three hours on Tuesday, during which time the attack may have taken place. “I have heard it was maybe a bomb scare (but) I don’t know if we can connect it (to the theft),” he added.

As can be expected, a European Union-wide hunt for the stolen units is now on.

According to Point Carbon, the EUAs were last understood to have been shifted into an account in Poland. But the story — thanks to some super sleuthing by PC — seemingly doesn’t end there. Some may even have been stolen goods to begin with:

According to a list of Blackstone’s missing EUAs, obtained by Point Carbon News, 13,100 units matched the identification numbers of some of the 1.6 million permits reported stolen in late November by European cement maker Holcim.

While 600,000 of the allowances plucked from Holcim’s account at the Romanian registry were identified in Liechtenstein’s registry and returned to the cement firm, around 1 million are still unaccounted for.

Nikos Tornikidis, a portfolio manager at Blackstone, told Point Carbon News he was unaware of the origin of the credits, adding only that they were bought through Amsterdam-based traders STX Services.“We are not aware that these EUAs were stolen, otherwise we would not have sold them,” said STX’s managing director Tim van der Noordt.

“It’s difficult because counterparties active in this market have different standpoints on the legitimacy of buying and selling these credits,” he said. After checking its inventory, STX confirmed that it did not hold any further credits linked to the Holcim theft.

Blackstone’s Tornikidis said his firm, which managed the missing credits on behalf of at least one industrial installation, had intended to swap the EUAs for CERs. The list of the 475,000 missing allowances revealed that the units came from 14 different countries, including 115,000 from the UK, 89,000 from Poland and 58,300 from Romania. None of the allowances originated from Czech installations, the data showed.

The list of the ID numbers of the stolen EUAs can be seen athttp://link.reuters.com/van27r

And if you thought that sort of confusion was enough to ruffle any market, reports of the missing units’ last known whereabouts now read like something out of the Bourne Identity.

From Point Carbon:

“We’ve heard the EUAs went to (an account in) Poland, then to Estonia, then to Liechtenstein, and the latest is they have left Liechtenstein, but we have no idea where they went after that,” Tornikidis said, adding that Czech authorities had been notified.

A Polish government spokeswoman would not confirm whether Polish accounts were closed because of the theft, saying only that it had shut for “security reasons” and that the registry could reopen later on Wednesday. A spokesman with the Estonian ministry of environment said the units had passed through the country’s registry before the government had been alerted to the theft.

Meanwhile, in another totally separate case, also revealed on the same day, Austria confirmed it too had suffered the theft of yet more EUAs — this time from a government holding account.

A spokeswoman for Austria’s emission registry told Point Carbon the theft was believed to have taken place during a hacking attack on January 10. She did not give a figure for the number of units stolen however. According to the news agency, though, this is the first reported case of stolen government units.

They added:

The Austrian government spokeswoman said the whereabouts of credits stolen was known, but she declined to give further details. “We know where the credits are, but nobody has exact access to them,” she said. “Austria’s public prosecutor is involved,” the spokeswoman said, adding that the registry would remain closed at least until 24 or 25 January, when more information would be provided.

Quite seriously, what sort of message does this send from Europe to the rest of the world, eh?

Related links: Does Europe need a carbon central bank? – FT Alphaville Carbon cop-out – FT Alphaville Carbon indulgences – FT Alphaville

In pursuit of 475,500 stolen European Union Allowances Posted by Izabella Kaminska on Jan 20 14:55. If you thought illiquid European sovereign markets weren’t enough of a problem — time now to familiarise yourselves with the latest trading quagmire to hit Europe. On Wednesday, the European Union was forced to suspend transfers of its carbon units, known as European Union Allowances (EUAs), after it transpired that yet morecontracts had been stolen from national registry accounts. The Czech Republic’s, in this case. This, of course, is not the first time the European Union Emissions Trading Scheme (ETS) has been rocked by such a scandal. Others have included VAT fraud, a phishing scam and even the re-sale of used carbon credits. The competent registration of units, though, is especially essential to making the scheme work — since carbon permits are a synthetic market with no natural supply or demand fundamentals of their own. Supply is stagnant and determined by countries’National Allowance Plans, themselves negotiated bitterly over many months between governments and the European Commission. If the NAPs (based on pollution quotas) have been mis-assessed, say over-estimated — demand for the units is likely to be limited with a price collapse a very possible consequence. This, by the way, is exactly what happened during the first round of the scheme. The systematic theft of units, consequently, can lead to the same thing, since all it does is pump more (illegal) supply into the closed-end structure. Now the theft could just be sabotage. After all, we imagine, there are plenty of people who might want to see the scheme fail. If it isn’t though, it suggests there are some amazing lengths countries and corporates are prepared to go to so as to con the system. For example, Point Carbon (PC), a specialist information firm that focuses on the market, on Thursday provided some very interesting colour — including the possibility that a bomb scare was involved in fronting the theft: An official with the Czech emissions registry confirmed it had received a formal complaint from an account holder about an EUA transfer that the company did not initiate. “It looks to be a different method from a simple phishing attack seen before… it is very serious,” said Miroslav Rehor with the Czech registry, adding that the missing EUAs had been transferred to an account in Poland. He said that Czech registry’s headquarters had been evacuated for three hours on Tuesday, during which time the attack may have taken place. “I have heard it was maybe a bomb scare (but) I don’t know if we can connect it (to the theft),” he added. As can be expected, a European Union-wide hunt for the stolen units is now on. According to Point Carbon, the EUAs were last understood to have been shifted into an account in Poland. But the story — thanks to some super sleuthing by PC — seemingly doesn’t end there. Some may even have been stolen goods to begin with: According to a list of Blackstone’s missing EUAs, obtained by Point Carbon News, 13,100 units matched the identification numbers of some of the 1.6 million permits reported stolen in late November by European cement maker Holcim. While 600,000 of the allowances plucked from Holcim’s account at the Romanian registry were identified in Liechtenstein’s registry and returned to the cement firm, around 1 million are still unaccounted for. Nikos Tornikidis, a portfolio manager at Blackstone, told Point Carbon News he was unaware of the origin of the credits, adding only that they were bought through Amsterdam-based traders STX Services. “We are not aware that these EUAs were stolen, otherwise we would not have sold them,” said STX’s managing director Tim van der Noordt. “It’s difficult because counterparties active in this market have different standpoints on the legitimacy of buying and selling these credits,” he said. After checking its inventory, STX confirmed that it did not hold any further credits linked to the Holcim theft. Blackstone’s Tornikidis said his firm, which managed the missing credits on behalf of at least one industrial installation, had intended to swap the EUAs for CERs. The list of the 475,000 missing allowances revealed that the units came from 14 different countries, including 115,000 from the UK, 89,000 from Poland and 58,300 from Romania. None of the allowances originated from Czech installations, the data showed. The list of the ID numbers of the stolen EUAs can be seen athttp://link.reuters.com/van27r And if you thought that sort of confusion was enough to ruffle any market, reports of the missing units’ last known whereabouts now read like something out of the Bourne Identity. From Point Carbon: “We’ve heard the EUAs went to (an account in) Poland, then to Estonia, then to Liechtenstein, and the latest is they have left Liechtenstein, but we have no idea where they went after that,” Tornikidis said, adding that Czech authorities had been notified. A Polish government spokeswoman would not confirm whether Polish accounts were closed because of the theft, saying only that it had shut for “security reasons” and that the registry could reopen later on Wednesday. A spokesman with the Estonian ministry of environment said the units had passed through the country’s registry before the government had been alerted to the theft. Meanwhile, in another totally separate case, also revealed on the same day, Austria confirmed it too had suffered the theft of yet more EUAs — this time from a government holding account. A spokeswoman for Austria’s emission registry told Point Carbon the theft was believed to have taken place during a hacking attack on January 10. She did not give a figure for the number of units stolen however. According to the news agency, though, this is the first reported case of stolen government units. They added: The Austrian government spokeswoman said the whereabouts of credits stolen was known, but she declined to give further details. “We know where the credits are, but nobody has exact access to them,” she said. “Austria’s public prosecutor is involved,” the spokeswoman said, adding that the registry would remain closed at least until 24 or 25 January, when more information would be provided. Quite seriously, what sort of message does this send from Europe to the rest of the world, eh

?

Related links: Does Europe need a carbon central bank? – FT Alphaville Carbon cop-out – FT Alphaville Carbon indulgences – FT Alphaville

2011/01/21

Update/ Carbon-Allowance Thieves Force EU to Boost Security

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Sent From Bloomberg Mobile MSG

+------------------------------------------------------------------------------+

Carbon-Allowance Thieves Force EU to Boost Security (Update1)
2011-01-21 17:15:54.191 GMT


(Updates with EU official in sixth paragraph, Allen &
Overy in seventh.)

By Ewa Krukowska and Mathew Carr
Jan. 21 (Bloomberg) -- The European Union, whose decision
to suspend registries halted the region's spot carbon-emissions
market following the theft of permits, said it won't lift
restrictions until member states step up identification checks.
The European Commission, the Brussels-based regulator, was
discussing new security measures today with the bloc's 27
national governments. It suspended most operations at Europe's
30 registries for greenhouse-gas emissions on Jan. 19 after a
Czech trader reviewing his $9 million account found "nothing
was there." The EU estimates permits worth about 29 million
euros ($38 million) are missing.
The EU suspension drove spot trading in the world's largest
carbon market to a halt yesterday and triggered calls from the
International Emissions Trading Association for a "speedy"
response to missing permits in the Czech Republic, Austria and
Romania in the last several months. Barclays Plc, which
continues to buy and sell futures contracts for emissions, said
it stopped most spot trading last month after Holcim Ltd., the
Swiss cement maker, lost 1.6 million permits to CO2 thieves.
"It's unfortunate they've had to shut down the market to
try to fix this," Louis Redshaw, the London-based head of
environment markets for Barclays Capital, said yesterday by
phone. "Hopefully this is the wake-up call that's required for
things to actually change."

Global Model

The EU market, started in 2005 and intended to be a model
for a future global carbon program, had trading volume of 80
billion euros last year, according to Bloomberg New Energy
Finance. While spot trading was halted yesterday until Jan. 26,
EU allowances for delivery in December 2011 faced no
restrictions and rose 0.6 percent today to 14.46 euros on the
ICE Futures Europe exchange in London.
National registries won't be allowed to restart operation
until they've implemented minimum security requirements, Peter
Zapfel, emissions trading policy co-ordinator for the
commission, said today in an interview. "The restrictions won't
be taken off the 27 member states in one go," he said. "For
those that are slow it may take some time, but we expect
everyone is taking it seriously."

Cap-and-Trade

Cap-and-trade puts a price on carbon by setting limits on
the amount of emissions polluters can produce. Those producing
more than the limit must buy permits to offset their emissions,
allowing those that emit less to sell their balance in the
market. While the system is set to have a central clearinghouse
starting in 2013, for now, keeping tabs on permits is up to so-
called national registries.
It could take "a long time, possibly years," to finally
resolve who are rightful owners of any stolen EU allowances,
said Owen Lomas, a London-based consultant at Allen & Overy
LLP's climate change practice. "It's difficult to predict how
long litigation might take as there may have been a series of
transactions that have gone through several jurisdictions."
The commission said some countries in the region's cap-and-
trade program will be told today they need additional security
procedures to supplement existing systems for accessing accounts
in national registries. This could include additional passwords
sent to mobile phones or the use of ID devices.

'Insure Deposits'

"At minimum they need to have second authorization in
place, such as electronic certificates or ID cards," said
Simone Ruiz, European policy director of the Geneva-based IETA.
"Someone needs ultimately to stand behind the integrity of the
system. As banks insure deposits against theft, registry
operators would surely be more diligent if this was the case for
registry accounts."
About half of the EU's 27 member states lack such a system,
the official said. One of them is the Czech Republic, where a
company managing the national database failed to implement the
so-called two-factor identification before it got attacked by
hackers.
The Czech registry was planning to introduce new security
Jan. 19, "but before we did so, we learned permits are
missing," said Zuzana Zahorovska, an administrator at Prague-
based OTE AS, which oversees ownership tracking. "More than one
company was affected. We're still checking all transactions, but
there are more missing permits than we thought. According to
very preliminary estimates it may be around 1 million."

Blackstone Global Ventures

Blackstone Global Ventures, a trader based in Brno,
informed the Czech administrators on Jan. 19 that it lost
475,000 allowances the previous day. The company, which isn't
affiliated with the New York-based asset manager of that name,
said the registry should take responsibility for the loss.
The allowances may have been transferred to accounts in
Poland, then Estonia, and then Lichtenstein, said Nikos
Tornikidis, manager of Blackstone's carbon portfolio.
"We don't regard it as Blackstone Global Venture's loss,"
Tornikidis said. "Nobody breached our servers."
This week's reported theft followed at least two incidents
in the past months involving improper transfers of permits. The
allowances are used by more than 11,000 European factories and
power stations to lawfully emit carbon dioxide.
In November, Romania's registry was accessed without
authorization, prompting a statement of regret from Jos Delbeke,
director general for the commission's climate department, which
supervises the carbon market. Last week the Austrian registry
blocked access to accounts after a hacker attack on Jan. 10.
BlueNext SA, the Paris-based exchange owned by NYSE
EuroNext that last year had the biggest share of spot carbon
trading, said its members want regulators to show "some courage
and commitment," according to Chief Executive Officer Francois-
Xavier Saint-Macary.
Under a plan the bourse proposed yesterday, members that
may have unwittingly purchased allegedly stolen permits would be
required to establish an "isolation account," which would hold
those permits and prevent trade until ownership is settled, he
said on a call with reporters.

For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>

--With assistance from Catherine Airlie in London and Zoe
Schneeweiss in Vienna. Editors: Mike Anderson, Rob Verdonck

To contact the reporters on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net;
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net

Fwd: + Climate Threatens Species at Every Altitude

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Sent From Bloomberg Mobile MSG

+------------------------------------------------------------------------------+

Climate Threatens Species at Every Altitude
2011-01-21 17:32:55.983 GMT


By ELISABETH ROSENTHAL
(New York Times) -- KINANGOP, Kenya — Simon Joakim Kiiru
remembers a time not long ago when familiar birdsongs filled the
air here and life was correlated with bird sightings. His lush,
well-tended homestead is in the highlands next to the Aberdare
National Park, one of the premier birding destinations in the
world.
When the hornbill arrived, Mr. Kiiru recalled, the rains
were near, meaning that it was time to plant. When a buzzard
showed a man his chest, it meant a visitor was imminent. When an
owl called at night, it foretold a death.
"There used to be myths because these are our giants," said
Mr. Kiiru, 58. "But so many today are gone."
Over the past two decades, an increasing number of settlers
who have moved here to farm have impinged on bird habitats and
reduced bird populations by cutting down forests and turning
grasslands into fields. Now the early effects of global warming
and other climate changes have helped send the populations of
many local mountain species into a steep downward spiral, from
which many experts say they will never recover.
Over the next 100 years, many scientists predict, 20 percent
to 30 percent of species could be lost if the temperature rises
3.6 degrees to 5.4 degrees Fahrenheit. If the most extreme
warming predictions are realized, the loss could be over 50
percent, according to the United Nations climate change panel.
Polar bears have become the icons of this climate threat.
But scientists say that tens of thousands of smaller species that
live in the tropics or on or near mountaintops are equally, if
not more, vulnerable. These species, in habitats from the high
plateaus of Africa to the jungles of Australia to the Sierra
Nevada in the United States, are already experiencing climate
pressures, and will be the bulk of the animals that disappear.
In response to warming, animals classically move to cooler
ground, relocating either higher up in altitude or farther toward
the poles. But in the tropics, animals have to move hundreds of
miles north or south to find a different niche. Mountain species
face even starker limitations: As they climb upward they find
themselves competing for less and less space on the conical
peaks, where they run into uninhabitable rocks or a lack of their
usual foods — or have nowhere farther to go.
"It's a really simple story that at some point you can't go
further north or higher up, so there's no doubt that species will
go extinct," said Walter Jetz, professor of ecology and
evolutionary biology at Yale, whose research last year predicted
that a third of the 1,000 mountain birds he studied, or 300
species, would be threatened because warming temperatures would
decimate their habitats.
Birds are good barometers of biodiversity because amateur
birdwatchers keep such extensive records of their sightings. But
other animals are similarly affected.
Two years ago, scientists blamed a warming climate for the
disappearance of the white lemuroid possum, a niche mountain
dweller in Australia that prefers cool weather, and that was cute
enough to be the object of nature tours. Many scientists,
suspecting that the furry animal had died off during a period of
unusually extreme heat, labeled the disappearance the first
climate-related animal extinction.
Since then, biologists have found a few surviving animals,
but the species remains "intensely vulnerable," said William F.
Laurance, distinguished research professor at James Cook
University in Australia, who said that in the future heat waves
would probably be the "death knell" for a number of cold-adapted
species.
For countries and communities, the issue means more than
just the loss of pleasing variety. Mr. Kiiru regrets the vastly
diminished populations of the mythic birds of Kikuyu tribal
culture, like buzzards, owls and hawks. But also, the loss of
bird species means that some plants have no way to pollinate and
die off, too. And that means it is hard for Mr. Kiiru to tend
bees, his major source of income.
Current methods for identifying and protecting threatened
species — like the so-called red list criteria of the
International Union for Conservation of Nature, a conservation
gold standard — do not yet adequately factor in the impact of
probable climate shifts, and the science is still evolving, many
scientists say.
Some species that scientists say are at most risk in a
warming climate are already considered threatened or endangered,
like the Sharpe's longclaw and the Aberdare cisticola in Kenya.
The cisticola, which lives only at altitudes above 7,500 feet, is
considered endangered by the international union, and research
predicts that climate change will reduce its already depleted
habitat by a further 80 percent by 2100.
Other Kenyan birds that are at risk from climate warming,
like the tufted, brightly colored Hartlaub's turaco, are not yet
on watch lists, even though their numbers are severely reduced
here. A rapid change of climate can quickly eliminate species
that inhabit a narrow niche.
On a recent afternoon, Dominic Kimani, a research
ornithologist at the National Museums of Kenya, combed a pasture
on the Kinangop Plateau for 20 minutes before finding a single
longclaw. "These used to be everywhere when I was growing up," he
said.
He added: "But it's hard to get anyone to pay attention;
they are just little brown birds. I know they're important for
grazing animals because they keep the grasses short. But it's not
dramatic, like you're losing an elephant."
As the climate shifts, mountain animals on all continents
will face similar problems. Scientists at the University of
California at Berkeley recently documented that in Yosemite
National Park, where there is a century-old animal survey for
comparison, half the mountain species had moved their habitats up
by an average of 550 yards to find cooler ground. Elsewhere in
the United States, the pika, the alpine chipmunk and the San
Bernardino flying squirrel have all been moving upslope in a
pattern tightly linked to rising temperatures. They are now
considered at serious risk of disappearing, said Shaye Wolf,
climate science director of the Center for Biological Diversity
in San Francisco, which in 2010 applied to protect a number of
American mountain species under the United States' Endangered
Species Act.
Last year, new research in the journal Ecological
Applications and elsewhere showed that the pika, a thick-furred,
rabbitlike animal that takes refuge from the sun in piles of
stones, was moving upslope at about 160 yards a decade and that
in the past decade it had experienced a fivefold rise in local
extinctions, the term used when a local population forever
disappears.
On the Kinangop Plateau in Kenya, Mr. Kimani exults when he
finds a Hartlaub's turaco, once a common sight, near Njabini
town, in a stand of remaining of old growth forest, after
engaging local teenagers to help locate the bird. The turaco
could lose more than 60 percent of its already limited habitat if
current predictions about global warming are accurate, according
to Dr. Jetz.
"Even substantial movement wouldn't help them out," he said.
"They would have to move to the Alps or Asian mountains to find
their mountain climate niche in the future."

Copyright 2011 The New York Times Company

-0- Jan/21/2011 17:35 GMT

(BN) Hungary May Sell $40 Million Carbon Permits by 2012, MTI Says

+------------------------------------------------------------------------------+

Hungary May Sell $40 Million Carbon Permits by 2012, MTI Says
2011-01-21 16:38:43.318 GMT


By Andras Gergely
Jan. 21 (Bloomberg) -- Hungary may raise between 6 billion
forint ($30 million) and 8 billion forint by the end of 2012 by
selling carbon dioxide emission credits , news agency MTI
reported, citing Development Minister Tamas Fellegi.
Half of the planned revenue from the carbon dioxide
allowances may come this year, MTI said, citing a written
response by Fellegi to a member of parliament. Sales of another
type of credit are more difficult to forecast, the minister
said, according to MTI.

For Related News and Information:
Top regional news: TOP EEU <GO>
Top Hungarian news: NI HUNGARY <GO>
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>

--Editors: Tim Farrand, Rodney Jefferson

To contact the reporter on this story:
Andras Gergely in Budapest +36-1-475-1177 or
agergely@bloomberg.net.


To contact the editor responsible for this story:
Gavin Serkin at +44-20-7673-2467
or gserkin@bloomberg.net

(BN) Estonia 2011 CO2 Credits Sales Will Exceed Plan, Official Says

+------------------------------------------------------------------------------+

Estonia 2011 CO2 Credits Sales Will Exceed Plan, Official Says
2011-01-21 12:48:34.508 GMT


By Ott Ummelas
Jan. 21 (Bloomberg) -- Estonia will exceed its plan to sell
spare United Nations carbon credits this year as previous
forecasts were too conservative, a senior government official
said.
The Baltic nation has estimated 2011 budget revenue of 25
million euros ($33.8 million) from the sales of emission
credits, assigned to the east European country under the 1997
Kyoto Protocol, Keit Kasemets, strategy director at the state
chancellery in Tallinn, said in a phone interview today. Estonia
sold 230 million euros worth of credits last year.
"We are much more optimistic than last summer, when we
made initial plans on emission sales, and will certainly sell
more than we planned," Kasemets said. "Still, as the markets
are becoming more cautious with uncertainties regarding the end
of period in 2012, we will likely remain below last year's
level."
Better-than-planned sales of its carbon-emissions quota
last year helped Estonia cut the state budget deficit to around
1 percent of gross domestic product, below the government's
forecast, Finance Minister Jurgen Ligi said earlier this month.
The government sees the budget deficit widening to 1.6 percent
of GDP this year.
Estonia's Environment Ministry in August 2009 proposed to
sell as many as 85 million metric tons of so-called Assigned
Amount Units, or AAUs, in the coming years by starting a Green
Investment Scheme, as part of efforts to boost budget revenue
hit by the second-worst recession in the 27-member European
Union. Such programs are designed to make sure the money is
spent on projects that curb greenhouse gases blamed for climate
change.
AAUs are assigned to developed and emerging nations that
have greenhouse-gas emission targets set as part of the
protocol. The Kyoto treaty allows countries with spare AAUs to
sell them to nations that have exceeded their quota.

For Related News and Information:
European power-market stories TNI EUROPE PWRMARKET <GO>
Today's top power, energy news PTOP <GO>, ETOP <GO>
Top environmental news GREEN <GO>
Carbon market events calendar ECAL <GO>

--Editors: James M. Gomez, Alan Crosby

To contact the reporter on this story:
Ott Ummelas in Tallinn at +372-663-1128 or
oummelas@bloomberg.net;

To contact the editor for this story:
Willy Morris at +44-20-7673-2254 or
wmorris@bloomberg.net.

(BN) Carbon Thieves Force EU to Improve Security, Close

we updating this story from first thing this morning with some stuff from today...will send later

+------------------------------------------------------------------------------+

Carbon Thieves Force EU to Improve Security, Close Spot Markets
2011-01-21 00:00:01.4 GMT


By Ewa Krukowska and Mathew Carr
Jan. 21 (Bloomberg) -- The European Union, which has shut
spot trading on the region's carbon-emissions market following
the theft of permits, said it won't lift restrictions until
member states step up identification checks.
The European Commission, the Brussels-based regulator, is
scheduled to discuss new security measures today with the bloc's
27 national governments. It halted most operations at
Europe's 30 registries for greenhouse-gas emissions on Jan. 19
after a Czech trader reviewing his $9 million account found
"nothing was there." The EU estimates permits worth about 29
million euros ($38 million) are missing.
The EU suspension drove spot trading in the world's largest
carbon market to a halt yesterday and triggered calls from the
International Emissions Trading Association for a "speedy"
response to missing permits in the Czech Republic, Austria and
Romania in the last several months. Barclays Plc, which
continues to buy and sell futures contracts for emissions, said
it stopped most spot trading last month after Holcim Ltd., the
Swiss cement maker, lost 1.6 million permits to CO2 thieves.
"It's unfortunate they've had to shut down the market to
try to fix this," Louis Redshaw, the London-based head of
environment markets for Barclays Capital, said yesterday by
phone. "Hopefully this is the wake-up call that's required for
things to actually change."

Global Model

The EU market, started in 2005 and intended to be a model
for a future global carbon program, had trading volume of 80
billion euros last year, according Bloomberg New Energy Finance.
While spot trading was halted yesterday, EU allowances for
delivery in 2011 faced no restrictions and closed yesterday at
14.37 euros, the lowest since Jan. 13, on the ICE Future Europe
exchange in London.
Cap-and-trade puts a price on carbon by setting limits on
the amount of emissions polluters can produce. Those producing
more than the limit must buy permits to offset their emissions,
allowing those that emit less to sell their balance in the
market. While the system is set to have a central clearinghouse
starting in 2013, for now, keeping tabs on permits is up to so-
called national registries.
"It is not the EU trading system that requires a major
change, but the registry security in individual member states,"
said Simone Ruiz, European policy director of the IETA. "At
minimum they need to have second authorization in place, such as
electronic certificates or ID cards. And someone needs
ultimately to stand behind the integrity of the system. As banks
insure deposits against theft, registry operators would surely
be more diligent if this was the case for registry accounts."

Additional Passwords

A senior EU official said countries in the region's cap-
and-trade program will be told today they need additional
security procedures to supplement existing systems for accessing
accounts in national registries. This could include additional
passwords sent to mobile phones or the use of ID devices, said
the official, who declined to be named, citing EU policy.
"The strong reaction by the European Commission is welcome
and the business community should actively provide support on
this," said Andrei Marcu, head of policy and regulatory affairs
at Mercuria Energy Group Ltd., the Geneva-based energy and
carbon trader, and former head of the International Emissions
Trading Association.
About half of the EU's 27 member states lack such a
system, the official said. One of them is the Czech Republic,
where a company managing the national database failed to
implement the so-called two-factor identification before it
got attacked by hackers.

'Preliminary Estimates'

"We were planning to introduce it yesterday, but before we
did so, we learned permits are missing," said Zuzana
Zahorovska, an administrator at Prague-based OTE AS, which
oversees the Czech registry. "More than one company was
affected. We're still checking all transactions, but there are
more missing permits than we thought. According to very
preliminary estimates it may be around 1 million."
Blackstone Global Ventures, a trader based in Brno,
informed the Czech administrators on Jan. 19 that it lost
475,000 allowances the previous day. The company, which isn't
affiliated with the New York-based asset manager of that name,
said the registry should take responsibility for the loss.
The allowances may have been transferred to accounts in
Poland, then Estonia, and then Lichtenstein, said Nikos
Tornikidis, manager of Blackstone's carbon portfolio.
"We don't regard it as Blackstone Global Venture's loss,"
Tornikidis said. "Nobody breached our servers."
This week's reported theft followed at least two incidents
in the past months involving improper transfers of permits. The
allowances are used by more than 11,000 European factories and
power stations to lawfully emit carbon dioxide.

'Courage, Commitment'

In November, Romania's registry was accessed without
authorization, prompting a statement of regret from Jos Delbeke,
director general for the commission's climate department, which
supervises the carbon market. Last week the Austrian registry
blocked access to accounts after a hacker attack on Jan. 10.
"Security is the responsibility of the national member
states for their own registries, but we of course as market
regulator have to act here and remind member states to take
measures," EU climate spokesman Maria Kokkonen said.
BlueNext SA, the Paris-based exchange owned by NYSE
EuroNext that last year had the biggest share of spot carbon
trading, said its members want regulators to show "some courage
and commitment," according to Chief Executive Officer Francois-
Xavier Saint-Macary.
Under a plan the bourse proposed yesterday, members that
may have unwittingly purchased allegedly stolen permits would
be required to establish an "isolation account," which would
hold those permits and prevent trade until ownership is
settled, he said on a call with reporters.
The halt of the EU registries will last at least until Jan.
26, according to the commission. It said it will work with
national authorities to determine what "minimum" security
measures need to be put in place before the suspension of a
registry can be lifted.

For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>

--With assistance from Catherine Airlie in London and Zoe
Schneeweiss in Vienna. Editors: Mike Anderson, Randall Hackley.

To contact the reporter on this story:
Ewa Krukowska in Brussels +32-2-237-4331 or
ekrukowska@bloomberg.net;
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net

(BN) EPA to Issue New Rules for Boilers After Court Rejects Timeline

+------------------------------------------------------------------------------+

EPA to Issue New Rules for Boilers After Court Rejects Timeline
2011-01-21 16:33:49.367 GMT


By Kim Chipman and Tom Schoenberg
Jan. 21 (Bloomberg) -- The U.S. Environmental Protection
Agency said it will work to meet a new court-ordered deadline to
issue emission standards for boilers and incinerators next
month, ahead of the April 2012 date sought by the agency.
A federal judge in Washington yesterday gave the agency a
one-month extension to issue the regulations, putting the
deadline at Feb. 21. The EPA asked U.S. District Judge Paul
Friedman in December for a 15-month extension to issue the final
rules to cut emissions from boilers and incinerators through
"maximum achievable control technology," known as MACT.
"EPA is disappointed that the extension wasn't longer,"
the agency said in a statement yesterday. "However, the agency
will work diligently to issue these standards by this new
deadline."
The EPA argued it needed more time to rethink the rules
proposed in April after receiving industry reaction and almost
5,000 public comments. Companies such as Weyerhaeuser Co., the
largest publicly traded U.S. timberland company by sales, said
the standards were too stringent and the Council of Industrial
Boiler Owners, a Burke, Virginia-based trade group, said the
rules could put more than 300,000 jobs at risk.
"The EPA will now have only a very small window to issue
the final rule," Alicia Oman, director of energy and resources
policy at the National Association of Manufactures in
Washington, said in a statement. "If implemented, the boiler
MACT rule will have a harmful impact on manufacturers of all
sizes and significantly hurt job creation."

Number of Extensions

In his order, Friedman noted that the case was filed more
than nine years ago and since 2006, he has issued the EPA "a
number" of extensions.
"The policy arguments EPA raises have no place in a case
where Congress has mandated expedition, and its statutorily
mandated deadlines have long since passed," Friedman wrote in
his opinion.
The EPA's final rules will be "significantly different"
from those proposed last year, according to the agency's
statement.
"EPA intends to ensure that the rules will be practical to
implement and will protect all Americans from dangerous
pollutants such as mercury and soot, which can damage children's
developing brains, aggravate asthma and cause heart attacks,"
the agency said.
Proposed rule on boiler emissions in Federal Register: 75
FR 32006. The case is Sierra Club v. Jackson, 01-cv-01537, U.S.
District Court, District of Columbia (Washington).

For Related News and Information:
Top EPA Stories: TNI TOP EPA <GO>
North American environmental markets: EMUS <GO>
A menu of world energy statistics: ENST <GO>
To chart the performance of the Bloomberg Americas Electric
Index: BUSELEC US <Index> GPO D <GO>
Top legal stories: TLAW <GO>
Bloomberg legal resources: BLAW <GO>

--Editors: Mary Romano, Charles Carter

To contact the reporters on this story:
Kim Chipman in Washington at +1-202-624-1927 or
kchipman@bloomberg.net;
Tom Schoenberg in Washington at +1-202-654-7367 or
tschoenberg@bloomberg.net

To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
lliebert@bloomberg.net

(BN) UN Emissions Traders Rush to Buy Back Contracts After

The error shows "how ill-prepared the European Commission
is to handle communications in a professional way," Emmanuel
Fages, the Paris-based head of carbon research at Orbeo, the
emissions-trading venture of Societe Generale SA and Rhodia SA,
said in an e-mail. The EU couldn't immediately be reached for
comment.

+------------------------------------------------------------------------------+

UN Emissions Traders Rush to Buy Back Contracts After EU Error
2011-01-21 16:33:51.273 GMT


By Catherine Airlie
Jan. 21 (Bloomberg) -- Traders in the United Nations
emissions market rushed to buy back contracts they had sold
minutes earlier after a publication error by the European Union.
The premium of UN emission credits for March 2013 over
those for December 2012 widened to a record 90 euro cents after
the EU mistakenly said member states voted to ban offsets
created in industrial gas projects from January 2013, reducing
their availability in the bloc's carbon cap-and-trade program.
The spread then reversed 1.10 euros on London's ICE Futures
Europe in 12 minutes after the EU retracted the statement.
The error shows "how ill-prepared the European Commission
is to handle communications in a professional way," Emmanuel
Fages, the Paris-based head of carbon research at Orbeo, the
emissions-trading venture of Societe Generale SA and Rhodia SA,
said in an e-mail. The EU couldn't immediately be reached for
comment.
A second statement from the EU said member states voted to
allow polluters in the world's largest emissions system to use
imported carbon offsets for 2012 until the end of April 30,
2013, delaying the start of a ban proposed by the regulator by
four months.
The discount of March 2013 credits stood at 15 cents over
those for December 2012 as of 4 p.m on ICE. That's 6 cents wider
than yesterday.
"There are financial consequences for market participants
to such a mistake," Fages said. "The communication of
sensitive information has to be upgraded to the standards of all
other financial markets."

For Related News and Information:
Top Power Stories: PTOP <GO>
Emissions MArkets, Pricing: EMIS <GO>

--Editors: Rob Verdonck, Stephen Cunningham

To contact the reporter on this story:
Catherine Airlie in London at +44-20-7073-3308 or
cairlie@bloomberg.net

To contact the editors responsible for this story:
Rob Verdonck at +44-20-3216-4149 or
rverdonck@bloomberg.net;
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net

(BN) EU Delays Ban on Imported CO2 Credits by Four Months (Update2)

+------------------------------------------------------------------------------+

EU Delays Ban on Imported CO2 Credits by Four Months (Update2)
2011-01-21 16:51:02.850 GMT


(Updates with EU comment from the third paragraph.)

By Ewa Krukowska
Jan. 21 (Bloomberg) -- The European Union decided to ban
the import of carbon credits linked to certain industrial gases
as of May 2013, delaying by four months the starting date for
the curbs in the world's largest greenhouse-gas market.
The agreement by the EU's 27 national governments targets
energy and manufacturing companies' use of United Nations-
sponsored offsets linked to hydrofluorocarbon-23 and some
nitrous oxide credits. The decision to push back the Jan. 1,
2013 date proposed by the European Commission, the EU's
regulatory arm, widened the discount of March 2013 offsets.
The EU said the credits facing the ban, generated for
reducing emissions of the industrial gases, offer "exorbitant"
return rates, can create a "perverse incentive" for investors
and undermine the market's integrity.
"Our aim is not to reduce the number of credits available
but to ensure the international carbon market is based on a
better quality and distribution of credits," European Climate
Commissioner Connie Hedegaard said in a statement published
today in Brussels.
More than 11,000 power plants and factories in the EU
carbon system may use UN credits as a cheaper way to comply with
their pollution quotas. Regulators around the world are clamping
down on HFC-23, whose warming potential is 11,700 times more
powerful than carbon dioxide. Officials at the UN carbon market
in November called for a revision of its procedures.

Surrendering Allowances

The EU emissions-trading program, known as ETS, is a
cornerstone of European efforts to tackle the heat waves, storms
and floods tied to climate change. The current five-year phase
in the system ends in 2012 and the deadline for surrendering
allowances for that year is the end of April 2013.
The delay of the ban is in line with calls by the
International Emissions Trading Association, which urged the
commission and the EU governments to delay the starting date to
May 1, 2013.
Some companies in the European cap-and-trade system,
including Italy's biggest utility, Enel SpA, called on the
regulator to limit the scope and delay the start of the ban.
"The agreement means that any UN credits issued between
January 2013 and the end of April 2013 can still be used for
2012 compliance," Peter Zapfel, head of policy coordination at
the commission's climate department, said by phone. "The
difference between the final date for compliance that we
suggested and the one that was approved is -- according to
different analyst estimates -- 30 million to 40 million credits
more."

Parliamentary Scrutiny

The discount of UN carbon offsets for March 2013 against
those for December 2012 widened by 5 cents to 14 euro cents as
of 4:46 p.m. on London's ICE Futures Europe exchange.
The ban will apply to UN credits linked to HFC-23 and
nitrous oxide from adipic acid production from the Clean
Development Mechanism, the world's second-biggest CO2 market,
and the Joint Implementation program. The measure will be
subject to a three-month scrutiny by the European Parliament
before it's officially adopted by the commission.
The 23 projects that cut HFC-23 and nitrous oxide from
adipic acid production registered under the CDM account for two-
thirds of all credits generated by the mechanism, according to
the commission data. Most of them are located in China and other
developing countries.
In the 2008-2012 trading period, emitters in the European
program can swap as many as 1.6 billion UN credits with EU
permits on a one-for-one basis. The EU average annual emissions
cap for that period is 2.04 billion metric tons of carbon
dioxide, valued at nearly 30 billion euros at today's prices.
One permit represents one ton of CO2.
"Today´s vote marks an historic victory for environmental
integrity over financial interests and puts the EU ETS back on
the right track," said Natasha Hurley, EU policy adviser at
environmental lobby group CDM Watch. "While we welcome the
outcome of today´s vote, it's unfortunate that member states
were not entirely immune to pressure from a small group of
investors who lobbied hard to extract as many concessions as
possible throughout this process."


For Related News and Information:
Emission market news: NI ENVMARKET <GO>
Today's top energy stories: ETOP <GO>
European power-markets home page: EPWR <GO>

--With assistance from Jonathan Stearns in Brussels and
Catherine Airlie and Mathew Carr in London. Editors: Alex
Devine, John Buckley.

To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-474-620-243 or
ekrukowska@bloomberg.net;

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net

(BN) Barclays Stops Most Carbon Spot Trading After Permit

from earlier today

+------------------------------------------------------------------------------+

Barclays Stops Most Carbon Spot Trading After Permit Thefts
2011-01-21 11:22:56.5 GMT


By Mathew Carr
Jan. 21 (Bloomberg) -- Barclays Plc said it stopped most
spot carbon trading last month after Holcim Ltd., the Swiss
cement maker, lost 1.6 million European Union permits worth
about 23.6 million euros ($32 million) to CO2 permit thieves.
The bank is still doing spot trade with a few customers,
including the U.K. government, Louis Redshaw, the London-based
head of environment markets for Barclays Capital, said yesterday
by phone from the Musandam Peninsula in the sultanate of Oman.
A reported $9 million theft this week in the Czech Republic
prompted the European Commission, regulator of the world's
biggest greenhouse gas program by traded volume, to close about
30 registries that track ownership of allowances around the
region, halting the spot emissions market for a week.
"It's unfortunate they've had to shut down the market to
try to fix this," Redshaw said. "Hopefully this is the wake-up
call that's required for things to actually change."
There are some features of spot markets that the commission
needs to take control of, away from the member states, he said.
Registries should have followed or should have been required to
follow the U.K. example and adopt tight security measures
starting in 2005, the first year of the program, Redshaw said.
"We've been highlighting problems and solutions for years."

For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>

--Editors: Rob Verdonck, Alex Devine

To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net

Fwd: + Emissions trading: Commission welcomes vote to ban certain indus

And again



---
Sent From Bloomberg Mobile MSG

+------------------------------------------------------------------------------+

Emissions trading: Commission welcomes vote to ban certain indus
2011-01-21 13:00:03.564 GMT



IP/11/56

Brussels, 21 January 2011

Emissions trading: Commission welcomes vote to ban certain industrial gas
credits

The European Commission welcomes today's vote by Member States to ban from use
in the EU Emissions Trading System (EU ETS) emission offset credits from
certain projects which destroy industrial gases. Essentially, the ban means
that companies will be able to use these credits for 2012 compliance under the
EU ETS until 30 April 2013, but not thereafter.

Connie Hedegaard, Commissioner for Climate Action, said: "I very much welcome
the Committee's decision to back this Regulation, less than 5 months after I
first proposed the idea. These projects raise concerns relating to their
environmental integrity, value-for-money and geographical distribution. Not
only are some of these credits of doubtful value, continuing to use them is
also not in the EU's interest as doing so could discourage host countries from
supporting cheaper and more direct action to cut these emissions. Our aim is
not to reduce the number of credits available but to ensure the international
carbon market is based on a better quality and distribution of credits."

The EU Climate Change Committee, which brings together representatives of the
27 Member States, voted for the ban today on the basis of a proposal tabled by
the Commission last November (see MEMO/10/614 ).

The ban will apply to projects which destroy two industrial gases:
trifluoromethane (HFC-23) produced as a by-product of chlorodifluoromethane
(HCFC-22) production, and nitrous oxide (N2O) from adipic acid production.
HFC-23 and N2O are both powerful greenhouse gases which contribute to climate
change.

Just 23 such industrial gas projects account for two-thirds of all the credits
generated through the Kyoto Protocol's Clean Development Mechanism (CDM). Most
such projects are undertaken in China and other advanced developing countries.
The ban on the use of such credits in the EU ETS will apply to all such
projects undertaken under the CDM as well as any undertaken in developed
countries through Kyoto's Joint Implementation mechanism (JI).

What is the problem?

The acceptance of credits from industrial gas projects has been controversial
for some time. The main concerns are:
*

Allowing credits from the destruction of HFC-23 can create a perverse incentive
to continue to produce or even increase production of it and of HCFC-22, a gas
which both depletes the ozone layer and is also a powerful greenhouse gas.
*

This contradicts the Kyoto Protocol rule that credits may come only from
projects which lead to emission reductions that are additional to what would
have happened anyway. The environmental integrity of the credits is therefore
questionable.
*

It also undermines attempts under the Montreal Protocol on protection of the
ozone layer to implement an accelerated phase-out of HCFC-22 for non-feedstock
use and to consider financing the destruction of HFC-23 on the basis of its
actual cost per tonne, which is far lower than the current market value of CDM
credits.
*

These projects do not provide value for money as they could have been funded
and implemented more cost-effectively by other means . Because of the credits
they receive, the rates of return are exorbitant — revenues from the sale of
HFC-23 credits to EU ETS participants can represent up to 78 times the initial
capital investment and operational costs of the project.
*

The EU considers that emission reductions which can be achieved relatively
cheaply — as with destruction of HFC-23 from HCFC-22 production and N2O from
adipic acid production - should not be financed through the international
carbon market. They should be undertaken by developing countries themselves as
part of efforts to reduce their own emissions. Alternatively, the actual
per-tonne cost of reductions could be directly funded.
*

The high proportion of CDM credits generated by the small number of industrial
gas projects distorts the geographical distribution of CDM projects in favour
of a limited number of advanced developing countries. This contradicts the
goal, strongly supported by the EU, of getting a more balanced spread of CDM
projects across the developing world, in particular by increasing the
involvement of least developed countries (LDCs).

In addition to these specific concerns, the EU wants to see the CDM
progressively phased out for the advanced developing countries. It should be
replaced by new mechanisms that would cover whole sectors and thus tap much
greater potential for emission reductions than the project-based CDM. Unlike
the CDM, these sectoral mechanisms would generate international credits only if
the sector achieved a pre-determined emissions performance threshold. The
existing EU legislation already provides that credits from new projects
registered after 2012 can only be used in the EU ETS if the projects are
located in Least Developed Countries (except where otherwise agreed through
future international or bilateral climate agreements).

Next steps

The European Parliament now has three months to comment on the proposal, after
which the Commission will formally adopt it. The restrictions will apply from
1st May 2013, giving market participants sufficient time to adapt.

Background

The CDM enables governments and companies in developed countries to invest in
emission-saving projects in developing countries in return for credits which
can be used to offset their own emissions. The JI mechanism does the same,
except that JI projects are undertaken in developed countries.

Further information

Questions and answers on the Commission's proposal (November 2010)

For more information on the European Emissions Trading System, see

http://ec.europa.eu/clima/policies/ets/index_en.htm
-0- Jan/21/2011 13:00 GMT

Fwd: EU to Restrict Some UN Emission Offsets From April 30, 2013

---
Sent From Bloomberg Mobile MSG

+------------------------------------------------------------------------------+

EU to Restrict Some UN Emission Offsets From April 30, 2013
2011-01-21 12:13:37.538 GMT


By Ewa Krukowska
Jan. 21 (Bloomberg) -- European Union member states voted
to allow emitters in the world's largest emissions system to use
imported carbon offsets for 2012 until the end of April 30,
2013, delaying the start of a ban proposed by the EU regulator,
an EU diplomat said.
The European Commission proposed Nov. 25 to put limits on
the use of United Nations-sponsored offsets linked to
hydrofluorocarbon-23 and some nitrous oxide credits for
compliance in the EU system as of Jan. 1, 2013. The draft was
voted today by the Climate Change Committee, including
representatives of the EU's 27 national governments.
The ban will become binding on Jan. 1, 2013, and offsets
generated by reduction of industrial gas emissions in developing
countries from the beginning of that year won't be accepted in
the EU system, the diplomat said, asking not to be identified,
citing EU policy.


For Related News and Information:
Top Stories:{TOP<GO>}

To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net

To contact the editor responsible for this story:
Rob Verdonck at +44-20-3216-4149 or
rverdonck@bloomberg.net

swinging un cer spread contract dec 2012 mar 2013

see attached. who made/lost money on this? how bad is this EU Commission mistake? Should people resign? comments our way please?

------------------------------------------------------------
Mathew Carr, emissions markets, energy reporter. London Bloomberg News ph +44 207 073 3531 yahoo ID carr_mathew

*EU SAYS VOTE ON OFFSET BAN HADN'T HAPPENED AT ANNOUNCEMENT

*EU SPOKESWOMAN MARIA KOKKONEN SPEAKS BY PHONE
*EU SAID AN EARLIER ANNOUNCEMENT ON OFFSET BAN MADE PREMATURELY
*EU SAYS VOTE ON OFFSET BAN HADN'T HAPPENED AT ANNOUNCEMENT TIME trying to find out when vote is happening/happened

EU SAYS ANNOUNCEMENT ON CARBON VOTE WAS MADE IN ERROR

EU HAD SAID NATIONS AGREED TO BAN USE OF IMPORTED CREDITS
EU SPOKESWOMAN SAYS ANNOUNCEMENT POSTED ON WEBSITE PREMATURELY
EU SAYS ANNOUNCEMENT ON CARBON VOTE WAS MADE IN ERROR

(EUR) Emissions trading: Commission welcomes vote to ban

source doc

+------------------------------------------------------------------------------+

Emissions trading: Commission welcomes vote to ban certain indus
2011-01-21 10:30:05.765 GMT



IP/11/56

Brussels, 21 January 2011

Emissions trading: Commission welcomes vote to ban certain industrial gas
credits

The European Commission welcomes today's vote by Member States to ban from use
in the EU Emissions Trading System (EU ETS) emission offset credits from
certain projects which destroy industrial gases. The ban will take effect from
1st January 2013.

Connie Hedegaard, Commissioner for Climate Action, said: "I very much welcome
the Committee's decision to back this Regulation, less than 5 months after I
first proposed the idea. These projects raise concerns relating to their
environmental integrity, value-for-money and geographical distribution. Not
only are some of these credits of doubtful value, continuing to use them is
also not in the EU's interest as doing so could discourage host countries from
supporting cheaper and more direct action to cut these emissions. Our aim is
not to reduce the number of credits available but to ensure the international
carbon market is based on a better quality and distribution of credits."

The EU Climate Change Committee, which brings together representatives of the
27 Member States, voted for the ban today on the basis of a proposal tabled by
the Commission last November (see MEMO/10/614 ).

The ban will apply to projects which destroy two industrial gases:
trifluoromethane (HFC-23) produced as a by-product of chlorodifluoromethane
(HCFC-22) production, and nitrous oxide (N2O) from adipic acid production.
HFC-23 and N2O are both powerful greenhouse gases which contribute to climate
change.

Just 23 such industrial gas projects account for two-thirds of all the credits
generated through the Kyoto Protocol's Clean Development Mechanism (CDM). Most
such projects are undertaken in China and other advanced developing countries.
The ban on the use of such credits in the EU ETS will apply to all such
projects undertaken under the CDM as well as any undertaken in developed
countries through Kyoto's Joint Implementation mechanism (JI).

What is the problem?

The acceptance of credits from industrial gas projects has been controversial
for some time. The main concerns are:
*

Allowing credits from the destruction of HFC-23 can create a perverse incentive
to continue to produce or even increase production of it and of HCFC-22, a gas
which both depletes the ozone layer and is also a powerful greenhouse gas.
*

This contradicts the Kyoto Protocol rule that credits may come only from
projects which lead to emission reductions that are additional to what would
have happened anyway. The environmental integrity of the credits is therefore
questionable.
*

It also undermines attempts under the Montreal Protocol on protection of the
ozone layer to implement an accelerated phase-out of HCFC-22 for non-feedstock
use and to consider financing the destruction of HFC-23 on the basis of its
actual cost per tonne, which is far lower than the current market value of CDM
credits.
*

These projects do not provide value for money as they could have been funded
and implemented more cost-effectively by other means . Because of the credits
they receive, the rates of return are exorbitant — revenues from the sale of
HFC-23 credits to EU ETS participants can represent up to 78 times the initial
capital investment and operational costs of the project.
*

The EU considers that emission reductions which can be achieved relatively
cheaply — as with destruction of HFC-23 from HCFC-22 production and N2O from
adipic acid production - should not be financed through the international
carbon market. They should be undertaken by developing countries themselves as
part of efforts to reduce their own emissions. Alternatively, the actual
per-tonne cost of reductions could be directly funded.
*

The high proportion of CDM credits generated by the small number of industrial
gas projects distorts the geographical distribution of CDM projects in favour
of a limited number of advanced developing countries. This contradicts the
goal, strongly supported by the EU, of getting a more balanced spread of CDM
projects across the developing world, in particular by increasing the
involvement of least developed countries (LDCs).

In addition to these specific concerns, the EU wants to see the CDM
progressively phased out for the advanced developing countries. It should be
replaced by new mechanisms that would cover whole sectors and thus tap much
greater potential for emission reductions than the project-based CDM. Unlike
the CDM, these sectoral mechanisms would generate international credits only if
the sector achieved a pre-determined emissions performance threshold. The
existing EU legislation already provides that credits from new projects
registered after 2012 can only be used in the EU ETS if the projects are
located in Least Developed Countries (except where otherwise agreed through
future international or bilateral climate agreements).

Next steps

The European Parliament now has three months to comment on the proposal, after
which the Commission will formally adopt it. The restrictions will enter into
force on 1 st January 2013, giving market participants sufficient time to
adapt.

Background

The CDM enables governments and companies in developed countries to invest in
emission-saving projects in developing countries in return for credits which
can be used to offset their own emissions. The JI mechanism does the same,
except that JI projects are undertaken in developed countries.

Further information

Questions and answers on the Commission's proposal (November 2010)

For more information on the European Emissions Trading System, see

http://ec.europa.eu/clima/policies/ets/index_en.htm
-0- Jan/21/2011 10:30 GMT

EU Agrees To Restrict Carbon Offsets From Start of 2013

surge see attached EU Nations Agree To Restrict Carbon Offsets From Start of 2013



By Ewa Krukowska
Jan. 21 (Bloomberg) -- European Union member states agreed
to restrict the use of imported carbon credits linked to certain
industrial gases in the world's largest emissions system from
the start of 2013, according to the EU regulator.
The European Commission proposed Nov. 25 to put limits on
United Nations-sponsored offsets linked to hydrofluorocarbon-23
and some nitrous oxide credits. The draft was voted today by the
Climate Change Committee, including representatives of the EU's
27 national governments.




For Related News and Information:
Top Stories:{TOP<GO> }


To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net

2011/01/20

(BN) Czech Registry Says About 1 Million CO2 Permits May Be Missing

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Czech Registry Says About 1 Million CO2 Permits May Be Missing
2011-01-20 15:41:39.878 GMT


By Ewa Krukowska
Jan. 20 (Bloomberg) -- About 1 million European Union
carbon allowances may be missing from accounts in the Czech
Republic, according to preliminary estimates from managers of
the nation's registry.
Zuzana Zahorovska, an administrator at the company
overseeing the Czech emissions registry, said more than one
company is missing permits.

For Related News and Information:
Top Energy Stories:{ETOP<GO>}

To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net

To contact the editor responsible for this story:
Mike Anderson at +44-20-7673-2718 or
manderson34@bloomberg.net

(BN) Germany to Speed Solar-Subsidy Cuts to Undercut Boom (Update2)

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Germany to Speed Solar-Subsidy Cuts to Undercut Boom (Update2)
2011-01-20 16:24:32.581 GMT


(Updates with CDU Bundestag member comment from 10th
paragraph.)

By Marc Roca and Brian Parkin
Jan. 20 (Bloomberg) -- Germany's Environment Ministry and
the solar industry agreed to cut subsidies six months earlier
than planned to slow growth in the world's largest market for
photovoltaic panels that turn sunlight into power.
The above-market rates paid for solar power will be lowered
in July by 3 percent to 15 percent for new installations if more
than 3.5 gigawatts are forecast for this year, the ministry said
today in Berlin. The estimate will be based on data for projects
connected to the distribution grid in March through May.
Chancellor Angela Merkel's government is paring aid to curb
the cost to consumers who pay for subsidies in their power bills
after solar-panel prices fell about 50 percent in the last two
years. That spurred a boom in new installations on rooftops and
fields and led to a glut on the German market.
"In the interests of power users in Germany, solar energy
must be cost-efficient and adjusted to market-price
developments," Environment Minister Norbert Roettgen said in a
briefing today in Berlin with Guenther Cramer, head of Germany's
BSW solar industry group. "A solar market that grows too
quickly and overheats would push up power costs."
If the forecast for Germany is more than 3.5 gigawatts, as
analysts expect, a portion of the cuts that originally were
planned for January 2012 will be moved to become effective in
July. Early reductions then will be deducted from the percentage
cuts planned for next year, which were set in law at as much as
24 percent, a ministry statement released today shows.

'Urgent' Response

Germany might install 6 to 8 gigawatts in new solar
photovoltaic capacity in 2011 out of about 20 gigawatts
worldwide, Bloomberg New Energy Finance forecast Jan. 12.
"The fact that industry and government and opposition
parties agreed on these cuts so rapidly illustrates the urgent
need to slow German PV market growth from an estimated 8-9
gigawatts in 2010 to a more sustainable level in 2011,"
Francesco D'Avack, a solar analyst at Bloomberg New Energy
Finance, said by e-mail today.
The Environment Ministry said it will implement cuts of 15
percent if capacity forecast for this year is more than 7.5
gigawatts. The reduction will be of 12 percent if new projects
exceed 6.5 gigawatts, 9 percent if they top 5.5 gigawatts, 6
percent for more than 4.5 gigawatts and 3 percent if over 3.5
gigawatts, according to the agreement. The scaled plan needs
approval from Parliament to become effective.

Fixed Cap

This agreement on flexible adjustment to financial support
makes it possible to avoid introducing a fixed cap to the
market, Gunther said in a BSW statement today. "A fixed cap
would not only cancel out competitive market forces, but would
also prove counterproductive to the objective of further
reducing the price of photovoltaic systems," he said.
A limit on solar installations and further tariff cuts are
still on the table, according to Joachim Pfeiffer, Bundestag
member and economics spokesman in the chamber for the ruling CDU
party.
"We need to look at subsidy cuts again, as well as the
possibility of reducing the 20-year payment for solar
generators," he said by telephone today. "We must also examine
whether we need to set a cap from next year. I don't rule out
the implementation of a cap."
Today's compromise wrought by the government and industry
over solar subsidies is a "stop-gap," a temporary move that
will stem surging subsidies that increase power prices, he said.


Building Boom

Germany pegged subsidies last year on an assumption new
solar capacity would grow by 5,000 megawatts. It actually grew
by some 7,000 megawatts, equal to about 6 new medium-sized
conventional electricity plants, according to the environment
minister. That's why the country had to speed up reducing
subsidies, he said at the briefing.
Cutting tariffs is one way to limit the cost of further
solar capacity build-up, according to D'Avack. "But in the past
such cuts have lead to even faster market growth as installers
and developers rushed to connect systems before the decline in
tariffs, making the problem only worse," he said.

For Related News and Information:
Top environment stories: GREEN <GO>
News on power markets: NI PWRMARKET <GO>
German top stories: TOPG <GO>
Top energy page: ETOP <GO>

--With assistance from Rainer Buergin in Berlin. Editors: Todd
White, Jonas Bergman

To contact the reporters on this story:
Brian Parkin in Berlin at +49-30-70010-6229 or
bparkin@bloomberg.net;
Marc Roca in London at +44-20-3216-4638
or mroca6@bloomberg.net

To contact the editors responsible for this story:
James Hertling at +33-1-5365-5075 or jhertling@bloomberg.net;
Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net

(BN) U.K’s Cameron Supports ‘Supergrid’ to Connect EU Power Markets

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U.K's Cameron Supports 'Supergrid' to Connect EU Power Markets
2011-01-20 16:31:45.767 GMT


By Catherine Airlie
Jan. 20 (Bloomberg) -- U.K. Prime Minister David Cameron
backed plans for "Supergrid" to connect markets and wind farms
throughout Europe.
Energy ministers will work together to create a framework
to build a network of cables linking countries and windfarms,
Cameron said at a U.K.-Baltic-Nordic Summit in London today,
according to an e-mailed statement.
The European Commission under President Jose Barroso is
trying to spur development of a Europe-wide grid for electricity
and natural gas. The aim is to diversify supplies from non-
European Union sources to avoid disruptions and establish more
power links between national grids. That would prevent blackouts
and allow utilities and traders to move electricity from one
market to another more easily. The commission is the 27-nation
EU's executive arm in Brussels.
"The future lies in green energy and Britain wants to work
with other countries to make the most of the clean energy
potential in and around the North Sea," Chris Huhne, U.K.
energy secretary, said in the same statement.

For Related News and Information:
Top government articles: TOP GOV <GO>
Top economy stories: TOP ECO <GO>
Top financial news: TOP FIN <GO>
Top legal articles: TOP LAW <GO>
EU market regulators: TNI EU MKTREG <GO>
Bloomberg Law news and information: BLAW <GO>

With assistance from Jonathan Stearns in Brussels --Editor: Mike
Anderson.

To contact the reporter on this story:
Catherine Airlie in London at +44-20-7073-3308 or
cairlie@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net

(BN) Blackstone Global Says Carbon Loss Is Registry’s Cost (Update1)

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Blackstone Global Says Carbon Loss Is Registry's Cost (Update1)
2011-01-20 16:50:08.357 GMT


(Updates with Blackstone comments from second paragraph.)

By Mathew Carr
Jan. 20 (Bloomberg) -- Blackstone Global Ventures, the
Czech carbon trader reporting the theft of about 7 million euros
($9.4 million) of permits, said the national registry OTE AS
that holds allowances should take responsibility for the loss.
The OTE registry in Prague is appointed by the national
government as custodian of the greenhouse-gas allowances, Nikos
Tornikidis, manager of Blackstone Global's carbon portfolio,
said in a telephone interview today. "It's got a fiduciary duty
toward us," he said. "Nobody breached our servers."
The alleged theft of 475,000 metric tons of allowances on
Jan. 18 and earlier incidents in Austria and Germany prompted
the European Commission, the Brussels regulator, to yesterday
halt registry operations across the 27-nation bloc, preventing
spot carbon trade for a week. Blackstone isn't affiliated with
the New York-based asset manager of that name. OTE officials
didn't answer calls seeking comment after office hours.
"We don't regard it as Blackstone Global Venture's loss,"
Tornikidis said from the company's base in Brno. "We regard it
as OTE's loss."
About 1 million European Union carbon allowances may be
missing from accounts in the Czech Republic, according to
preliminary estimates from managers of the nation's registry.
More than one company is missing permits, Zuzana Zahorovska, an
administrator at OTE, said today.

Daily Check

A colleague told Tornikidis yesterday morning of the
missing allowances after a daily check spotted the empty
account, one of several held by the company, he said. "We have
a policy to check our accounts every day," he said. "Nothing
was there. I was supposed to trade them in yesterday."
The carbon transaction occurred about noon on Jan. 18,
Tornikidis said. Whoever handled it may have had administrator's
rights in the registry to divert transaction-confirmation e-
mails that otherwise would have been sent, he said. The
allowances may have been transferred to accounts in Poland, then
Estonia and then Liechtenstein, he said.
It was "impossible" that the theft could have been made
by someone within Blackstone Global, with only two people
holding the passwords, Tornikidis said. The company doesn't
necessarily blame OTE employees for the incident, he said.
"It's a systematic fault," he said. "We as a company don't
see any wrongdoing on our side."

For Related News and Information:
Emission market news NI ENVMARKET <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>

--With assistance from Ewa Krukowska in Brussels. Editors: Rob
Verdonck, Mike Anderson

To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net

(BN) Russia’s Rusal to Earn UN Emissions Credits at Aluminum Smelter

+------------------------------------------------------------------------------+

Russia's Rusal to Earn UN Emissions Credits at Aluminum Smelter
2011-01-20 12:03:23.121 GMT


By Catherine Airlie
Jan. 20 (Bloomberg) -- United Co. Rusal, billionaire Oleg
Deripaska's aluminum company, said it may earn as much as $15
million from selling United Nations emissions credits generated
by reducing emissions at a smelter in Russia.
Cutting production of perfluorocarbon, a greenhouse gas
more potent than carbon dioxide, at the site in Krasnoyarsk has
been approved by the UN's Kyoto Protocol to earn emission
reduction units, the company said in a statement. These are
tradeable credits that can be used by nations and European
factories and power stations to comply with emission caps.
The project, which slashed 464,500 metric tons of carbon-
dioxide equivalent in the two years through 2009, is expected to
cut a total of 1.16 million tons in the four years through 2012,
according to the statement.
UN ERUs for immediate delivery were 11.20 euros a metric
ton yesterday on the Paris-based BlueNext exchange. Carbon Trade
& Finance, a venture between OAO Gazprombank and Commerzbank AG,
is the buyer of offsets from the project, Rusal said.

For Related News and Information:
Top Power Stories: PTOP<GO>

--Editors: Rob Verdonck, Torrey Clark

To contact the reporter on this story:
Catherine Airlie in London at +44-20-7073-3308 or
cairlie@bloomberg.net

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net