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EU Aims for 'Swift Reaction' on UN CO2 Offsets, Hedegaard Says
2010-08-31 12:57:13.889 GMT
By Ewa Krukowska
Aug. 31 (Bloomberg) -- The European Union regulator wants
to offer carbon markets a quick response on restrictions that
could be imposed on United Nations offset credits for use in the
bloc's cap-and-trade system, the EU's climate chief said.
The EU is working on a draft measure introducing further
quality restrictions on offsets from industrial-gas projects
after 2012. The European Commission, the bloc's regulatory arm,
has said it is concerned that credits related to
hydrofluorocarbon-23 and nitrous oxide may be generating
"windfall" profits for some developers.
"It will have to go through a lot of consultation
procedures, but the aim is that it is for a swift reaction,
because there's something in the system that simply doesn't work
well enough," Hedegaard said in an interview in Brussels today.
UN offsets, awarded on projects that lower emissions in
developing nations, can be swapped on a one-for-one basis with
EU permits for compliance in the European carbon program, the
world's largest.
Regulators of the UN Clean Development Mechanism are also
ramping up scrutiny after allegations that some developers are
seeking excessive credits related to HFC-23, an industrial gas
whose warming potential is 11,700 times more powerful than
carbon dioxide. They announced reviews of 10 issuances related
to HFC projects this month, to assess whether the methodology
for awarding those offsets should be changed.
'Very Low Ebb'
The confidence of the carbon market in the CDM is at a
"very low ebb," the International Emissions Trading
Association said last week. Private investors urgently need
certainty from the commission about the use of UN offsets
through 2020, the lobby said.
A commission proposal to impose limits on UN credits
eligible for compliance in the EU emissions trading system would
require member states' approval to become binding. While
political discussions on offsets have already started, it is
"too early to say" when the draft measure will be presented,
Hedegaard said.
"It's very crucial for me as the commissioner for climate
action that we have environmental integrity," she said.
The EU's emissions trading system, or ETS, covers more than
12,000 facilities that produce energy or goods ranging from
paper to cement. Polluters must have an allowance for each ton
of carbon dioxide they let off when burning fossil fuels. Those
producing more than their allowance must buy more; those that
emit less can sell their surplus.
The EU aims to make the ETS, started in 2005, the
cornerstone of a global carbon market. The 27-nation bloc seeks
to cut greenhouse gases by one-fifth by the end of this decade
compared with 1990 levels and has said it may boost that target
to 30 percent should other countries follow suit.
"There were some challenges in the beginning, in the first
years, but I think they've been corrected and today I think that
globally there will be an agreement that this is by and large a
very good and sound system," Hedegaard said. "Sometimes there
can be corrections needed and then we're doing that. "
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>
--Editors: Rob Verdonck, Stephen Cunningham
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
