"Whereas I might have a too-rosy picture on what the CDM
executive board has been doing over the last few years, they
have a too-dark picture," Barata said of the EU's position.
"To say they are hampering CDM reform? No. Absolutely not." After a few more months, the board may be able to place
more trust in the audit firms that verify emission reductions,
easing issuance approvals, Barata said. "We could introduce
this less thorough review for every single case."
+------------------------------------------------------------------------------+
UN Carbon Regulator Sees Fast Pace of Credit Supply (Update1)
2010-12-22 09:51:19.909 GMT
(Updates with IDEAcarbon comment in eighth paragraph.)
By Mathew Carr
Dec. 22 (Bloomberg) -- The increased pace of carbon credits
flowing from a United Nations-overseen market will be maintained
as European Union officials seek improvements to the biggest
program for emission offset credits, a senior UN regulator said.
The EU allows some UN offsets to be traded in its own
carbon trading system, which is the world's largest. Some
European regulators have a "too-dark" view of the performance
of the UN Clean Development Mechanism, said Pedro Martins
Barata, a Portuguese member of the CDM executive board and a
candidate for the chairman's job in February.
The number of offsets issued by the CDM reached a monthly
record of 24.8 million metric tons in November, nine times
higher than in July, and will probably almost match that this
month, according to an estimate from Bloomberg New Energy
Finance, the London carbon-market research company.
"We're seeing rejection rates, review rates, especially
for issuance, much, much lower than we were seeing before,"
Barata said this week in phone interviews. "We are catching up
with the backlog of projects already and finally seem to be
managing it rather well."
EU allowances for December 2011 fell as low as 14 euros
($18.39) a ton on Dec. 20, the lowest since July 28, as UN
issuance boosted supply of credits. They've risen 8.8 percent
this year and were at 14.31 euros as of 9:27 a.m. today.
Certified Emission Reduction credits from the CDM for 2011 were
at 11.50 euros, from 11.36 euros yesterday. CERs, which are
tradable offset credits, are created for investors when they
reduce emissions in developing countries through projects such
as wind farms.
Clearing the Backlog
During the past two months, the UN assigned more staff to
process requests for carbon credits to clear a backlog that
stood at 312 projects as of Oct. 22. The board wants to cut it
to 62 by Jan. 1, according to a Nov. 25 estimate. "We're now
down to a one-month delay," Barata said yesterday. "I'm
confident we can keep the pace."
With new procedures at the CDM, "a lot of pessimism about
the rejection rate and the review rate" for credits over the
past year and a half will "go away, fairly soon," Barata said.
It is possible the program may issue a record 30 million
tons of credits next month, IDEAcarbon, the London-based company
that rates emission-cutting projects, said yesterday in a
research report.
The International Emissions Trading Association, which
represents carbon traders and investors in greenhouse-reduction
projects, urged EU officials earlier this month at a UN-led
climate conference in Cancun, Mexico, to better protect those
putting up the money for carbon trading.
EU's View
The EU "lost sight" of the importance of keeping
investment going in emission-cutting projects, Henry Derwent,
president of the Geneva lobby group and a climate negotiator for
former U.K. Prime Minister Tony Blair, said last week by phone.
The EU wasn't seeking to block CDM reform on a proposed
appeals process, improved communication between regulators and
investors and new project-crediting systems, according to a
statement distributed Dec. 8 by Elisabeth Lannoo, a European
Commission communications officer attending the Cancun talks.
Barata, who is a climate negotiator for Portugal in
addition to his UN post, also defended the EU's stance.
"Whereas I might have a too-rosy picture on what the CDM
executive board has been doing over the last few years, they
have a too-dark picture," Barata said of the EU's position.
"To say they are hampering CDM reform? No. Absolutely not."
Appeals Process
Important legal questions need to be addressed before the
CDM installs a regulatory-decision-appeals process, said Barata.
The process has been sought by investors for at least three
years. Rulemakers need to narrow down about five options for
governance of the appeals system and decide what type of claims
the process will cover, he said.
Now is not the time to divert the limited resources in the
CDM away from project registrations and offset issuance to a
proposed "help desk" that would improve communication between
regulators and investors, Barata said.
While the commission probably isn't seeking to curb supply
of United Nations offsets, it's clear "the commission does not
like CDM very much," he said.
'Work for Users'
The EU needs to better understand the importance of keeping
investors onside, said IETA's Derwent. "We didn't think they
understood the importance of making the system work for users,"
he said last week in a phone interview. "If people get put off
the carbon market today, they won't be part of the expanded
carbon market tomorrow."
After a few more months, the board may be able to place
more trust in the audit firms that verify emission reductions,
easing issuance approvals, Barata said. "We could introduce
this less thorough review for every single case."
There's still a risk the executive board gets distracted,
which might cut its ability to oversee registration and issuance
requests, he said.
CDM Watch, the Bonn-based environmental lobby group, wants
the board to review every methodology that projects must comply
with in order to get credits. "The aim is to have a fundamental
overhaul," Eva Filzmoser, CDM Watch's program director, said in
a Cancun interview.
Clifford Mahlung of Jamaica, the CDM's current head, is due
to step down in February at the end of his one-year term. The
position rotates between developed and emerging nations each
year.
For Related News and Information:
EU carbon-market stories: TNI EU ENVMARKET <GO>
Top energy, power news: ETOP <GO>, PTOP <GO>
Top environmental stories: GREEN <GO>
--Editors: Rob Verdonck, Raj Rajendran
To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
