"If a credit is for delivery in 2012, you should have it
delivered by the end of 2012," Slingenberg said. "If it
doesn't happen, that's a separate contractual issue. Why should
we take the blame for it?" ...comments our way is it a matter of blame or trust? did the EU say these offsets could be used for compliance in phase II or not?...or just compliance in 93% of phase II?
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Mathew Carr, emissions markets, energy reporter. London Bloomberg News ph +44 207 073 3531 yahoo ID carr_mathew
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EU to Analyze CO2 Oversight, May Ban HFC Offsets From 2013
2010-10-28 05:00:01.0 GMT
By Ewa Krukowska
Oct. 28 (Bloomberg) -- The European Union may stop allowing
use of industrial-gas-related credits from the United Nations
in its carbon program as soon as 2013, and it plans to analyze
oversight of its emissions market next year.
"The commission is considering restrictions on certain
types of project related to industrial gases HFC-23 and nitrous
oxide," Yvon Slingenberg, emissions-unit head at the
commission's climate department, said in an interview yesterday
in Brussels. "An outright ban is one of the options."
The European Commission, the EU regulator, has said that UN
credits from reducing hydrofluorocarbons and nitrous oxide
create "significant windfall profits" and may undermine the
environmental integrity of the market. The EU law allows the use
of UN offsets for compliance in the bloc's emissions-trading
systems as long as they ensure "real, verifiable, additional
and permanent" emission reductions, Slingenberg said.
"The proposal is in internal consultation," she said.
"We need to come to a final decision within the commission now
and then the proposal will be presented to member states."
Regulators of the UN carbon program, the 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 are assessing whether the
methodology for awarding those offsets should be changed.
UN offsets, or Certified Emission Reductions, are awarded
on projects that lower emissions in developing nations and can
now be swapped one-for-one with permits in the EU's cap-and-
trade program, the world's largest carbon market.
Earliest Date
The earliest possible date for any restrictions on offsets
credits in the EU program is Jan. 1, 2013, according to the
bloc's law. The current trading period in the EU emissions
trading system, or ETS, ends in 2012 and the deadline for
surrendering allowances for that year is the end of April 2013.
"The fact that the compliance deadline for 2012 is in 2013
will be something that we will look at," Slingenberg said.
"But policy makers can also decide that you can no longer use
the credits from January 2013. April is the ultimate surrender
deadline, but operators can hand in the credits earlier, e.g. in
December 2012."
The EU ETS covers more than 12,000 facilities that produce
energy or goods ranging from paper to cement. Emitters including
E.ON AG, Germany's biggest utility, and Royal Dutch Shell Plc,
Europe's largest oil company, need 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.
Advance Notice
"The date from when certain credits will no longer be
usable will be known in advance," Slingenberg said. "If we
make a proposal now before the end of the year and it's approved
within a couple of months, markets will have two more years to
make use of their credits. Also, EU restrictions don't mean that
you can't use those credits elsewhere."
The spread between EU carbon permits and UN credits for
delivery next year widened 6 euro cents to 3.04 euros yesterday.
Carbon traders have said delays by UN regulators in issuing
offsets may leave them with unusable credits for 2012.
"If a credit is for delivery in 2012, you should have it
delivered by the end of 2012," Slingenberg said. "If it
doesn't happen, that's a separate contractual issue. Why should
we take the blame for it?"
The planned commission proposal will require EU member
states approval to become binding. Climate Commissioner Connie
Hedegaard, who has also called for international action to phase
out the production of hydrofluorocarbons, said on Oct. 15 the
bloc's nations will likely support curbs on the use of offsets
from industrial gases in the EU emissions program.
'Large Share'
The EU is also planning to study the oversight of its carbon
market to gauge whether further measures are needed to ensure
spot trading is well-protected from abuse, Slingenberg said.
"The financial market rules already apply to a large share
of the carbon market, offering the maximum level of protection
one could think of today," she said. "The gap is spot trading
and over-the-counter markets. We'll do a further analysis next
year to better assess the risk."
The bloc already toughened its emissions-system regulation
in April, after a sale of offset credits already used for
compliance in the European market halted spot trading for three
days in March.
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>
--Editor: Mike Anderson
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
