our earlier story attached EU's Hedegaard Says UN Emissions Market Needs 'Major Overhaul'
By Stephen Voss
Aug. 25 (Bloomberg) -- European Commissioner for Climate
Action Connie Hedegaard said that the United Nations Clean
Development Mechanism, which generates carbon emission credits,
needs a "major overhaul." She also wants "quality
restrictions" on credits related to industrial gas projects
after 2012, she said in a statement today.
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To contact the reporter on this story:
Stephen Voss in London at +44-20-7073-3520 or
sev@bloomberg.net
To contact the editor responsible for this story:
Mike Anderson at +44-20-7673-2718 or
manderson34@bloomberg.net
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EU Waits to Set CO2 Offset Limits as Lobby Urges Fast Action
2010-08-25 12:57:10.344 GMT
By Ewa Krukowska
Aug. 25 (Bloomberg) -- The European Union is waiting with a
proposal that may restrict United Nations carbon credits in its
cap-and-trade program as the lobby group for emission traders
urges a quick decision.
The European Commission, the EU's regulatory arm, is
concerned that credits related to the industrial gases
hydrofluorocarbon-23 and nitrous oxide may be generating
"windfall" profits for some developers, it said in a May
report. The bloc is considering discounting and other
restrictions on some types of offsets issued under the UN's
Clean Development Mechanism.
"These concerns have not resulted in any concrete proposal
yet, and we have not taken any formal decision whether that
should be the case," the commission said today in an e-mail.
"It's connected to what's happening in the international
negotiations as well, as we are following the work that is
taking place in the CDM executive board."
Regulators of the CDM are 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 six HFC projects this month to assess whether the
methodology for awarding those offsets should be changed.
The International Emissions Trading Association, a Geneva-
based lobby group for carbon traders, asked yesterday for a
meeting with EU Climate Commissioner Connie Hedegaard and
requested more certainty from the commission about the use of UN
offsets through 2020. Private investors "urgently" need
certainty to regain confidence in the CDM, and the commission
should wind down the debate, IETA said.
Supply Concerns
UN Certified Emission Reductions for December 2010 are up 9
percent this month on speculation that the UN clampdown will
restrict the supply of credits. CERs, awarded on projects that
lower emissions in developing nations, currently can be swapped
on a one-for-one basis with EU permits in the bloc's carbon
market.
The 27-nation EU seeks to cut greenhouse gases by one-fifth
by the end of this decade compared with 1990 levels. The bloc
has said it may boost that target to 30 percent should other
countries follow suit. The next round of international talks on
climate change starts Nov. 29 in Cancun, Mexico.
The European Union's cap-and-trade program, the world's
largest, covers more than 12,000 facilities that produce energy
or goods ranging from paper to cement. Emitters must have an
allowance for each ton of carbon dioxide they emit in burning
fossil fuels. Those producing more than their allowance must buy
more; those that emit less can sell their surplus.
Continuing Debate
While the commission can put forward a proposal to impose
quality limits or multipliers on UN credits eligible for
compliance in the EU emissions trading system, it would require
member states approval to become binding.
"Ultimately, that is a political decision," the
commission said. "There have been discussions in the working
party on environment also about these aspects, and there were
diverging views on whether quality restrictions that were
suggested would be appropriate or not."
The debate may be continued at the next meeting of the EU
environment ministers on Oct. 14 in Luxembourg. The earliest
date that any kind of quality requirements for CDM could be
implemented would be Jan. 1, 2013, the commission said. Whether
that will impact projects that have already been registered will
be open to the debate, it said.
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: Mike Anderson, Rob Verdonck.
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
