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'Homeless' HFC-23 Offsets May Flood New Zealand, IdeaCarbon Says
2010-12-02 10:53:48.501 GMT
By Ewa Krukowska
Dec. 2 (Bloomberg) -- United Nations offsets from
industrial-gas projects may flood the emissions-trading program
in New Zealand and push the country's carbon prices lower if the
European Union prohibits their use, according to IDEACarbon.
The EU proposed last week a ban for use in its carbon
program, the world's largest, of credits linked to HFC-23 as
well as nitrous oxide from adipic acid production. The European
Commission, the EU regulator, said that projects related to
those industrial gases may create "excessive" profits and
undermine market integrity.
UN Certified Emission Reduction credits, known as CERs and
awarded to projects that cut emissions in developing countries,
can be used for compliance in the EU and New Zealand's carbon
programs as an alternative to allowances issued by the systems.
"Beyond Europe, New Zealand is currently the only
established marketplace for the decreasingly relevant HFC-23 and
N20 CERs," Matthew Gray, an analyst at IdeaCarbon in London,
wrote in a note. "If there is cost-parity between New Zealand's
units and CERs, the illiquid and shallow New Zealand's market
will quickly be flooded by foreign CERs looking for a home."
As EU national governments prepare for a debate on the
proposed ban, the regulators of the UN Clean Development
Mechanism, the world's second-biggest emissions market, consider
a change of methodology for awarding credits to projects that
cut HFC-23 amid allegations of misuse.
Under a scenario where a change of methodology by the CDM
regulator cuts yields at HFC-23 projects by 70 percent, total
issuance of credits related to this gas will be at 908 million
tons through 2030, according to IdeaCarbon. It will rise to 1.63
billion tons under a business-as-usual case.
UN CERs for delivery in December this year traded 0.9
percent higher at 11.95 euros a ton in London today, while EU
allowances gained 1.2 percent to 15.01 euros. Spot prices for
carbon credits in New Zealand were NZ$20.8 ($15.70) last week,
according to a Nov. 26 report by Auckland-based broker
OMFinancial Ltd.
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, 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
