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Enel Says EU Should Limit Scope, Delay Start of CO2-Offset Ban
2010-11-19 13:16:18.613 GMT
By Ewa Krukowska
Nov. 19 (Bloomberg) -- The European Union regulator should
limit the scope and delay the start of a planned ban on carbon
offsets in its emissions-trading system to avoid market
distortions, according to Italy's biggest utility, Enel SpA.
The European Commission, the 27-nation bloc's regulatory
arm, is considering a ban as of 2013 on the use of United
Nations-sponsored credits related to industrial gases including
hydrofluorocarbons and nitrous oxide. The commission said they
may create windfall profits for investors and undermine the
environmental integrity of the region's carbon cap-and-trade
program, the world's largest
"We believe the EU should limit the restrictions to new
projects, and to already registered projects after expiry of the
first crediting period, which for most industrial-gases projects
expire by 2014 at the latest," Giuseppe Deodati, Enel's head of
carbon strategy, said by e-mail today.
The EU may present its proposal to member states after the
global-warming summit starts on Nov. 29 in Cancun, Mexico,
Climate Commissioner Connie Hedegaard said today.
The future of the UN Clean Development Mechanism, the
world's second-biggest carbon market, and other tools to cut
greenhouse gases linked to heat waves, floods and more-intense
storms will be on the agenda when envoys worldwide meet to
discuss a climate- protection framework for when the 1997 Kyoto
Protocol expires at the end of 2012.
"If the commission pursues the idea of enforcing quality
restrictions, it should bear in mind that operators took
commitments in the CDM market with a long-term perspective,
relying on the fact that the EU emissions trading system would
last beyond the Kyoto compliance period," Deodati said.
Cheaper Alternative
More than 11,000 facilities in the EU cap-and-trade program
may now use UN credits, which are cheaper than EU allowances,
for compliance with their pollution quota.
In the current five-year trading period through 2012, the
installations in the program can swap as many as 1.6 billion UN
credits with EU permits on a one-for-one basis, according to the
commission. The EU average annual emissions cap for that period
is 2.04 billion tons of carbon dioxide. One permit represents
one ton of CO2.
"If the commission pushes forward a proposal on
qualitative restrictions, it must clarify the objectives and the
principles driving the decision to ban certain project types,"
Deodati said. "If these principles are not applied, the
unintended consequences could be market distortions,
fragmentation, credit supply gap in a moment when no other
alternative mechanism is available, discouragement of future
investments and severe undermining of trust in the international
negotiation 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>
--Editors: Mike Anderson, Randall Hackley.
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
