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EU Delays Ban on Imported CO2 Credits by Four Months (Update2)
2011-01-21 16:51:02.850 GMT
(Updates with EU comment from the third paragraph.)
By Ewa Krukowska
Jan. 21 (Bloomberg) -- The European Union decided to ban
the import of carbon credits linked to certain industrial gases
as of May 2013, delaying by four months the starting date for
the curbs in the world's largest greenhouse-gas market.
The agreement by the EU's 27 national governments targets
energy and manufacturing companies' use of United Nations-
sponsored offsets linked to hydrofluorocarbon-23 and some
nitrous oxide credits. The decision to push back the Jan. 1,
2013 date proposed by the European Commission, the EU's
regulatory arm, widened the discount of March 2013 offsets.
The EU said the credits facing the ban, generated for
reducing emissions of the industrial gases, offer "exorbitant"
return rates, can create a "perverse incentive" for investors
and undermine the market's integrity.
"Our aim is not to reduce the number of credits available
but to ensure the international carbon market is based on a
better quality and distribution of credits," European Climate
Commissioner Connie Hedegaard said in a statement published
today in Brussels.
More than 11,000 power plants and factories in the EU
carbon system may use UN credits as a cheaper way to comply with
their pollution quotas. Regulators around the world are clamping
down on HFC-23, whose warming potential is 11,700 times more
powerful than carbon dioxide. Officials at the UN carbon market
in November called for a revision of its procedures.
Surrendering Allowances
The EU emissions-trading program, known as ETS, is a
cornerstone of European efforts to tackle the heat waves, storms
and floods tied to climate change. The current five-year phase
in the system ends in 2012 and the deadline for surrendering
allowances for that year is the end of April 2013.
The delay of the ban is in line with calls by the
International Emissions Trading Association, which urged the
commission and the EU governments to delay the starting date to
May 1, 2013.
Some companies in the European cap-and-trade system,
including Italy's biggest utility, Enel SpA, called on the
regulator to limit the scope and delay the start of the ban.
"The agreement means that any UN credits issued between
January 2013 and the end of April 2013 can still be used for
2012 compliance," Peter Zapfel, head of policy coordination at
the commission's climate department, said by phone. "The
difference between the final date for compliance that we
suggested and the one that was approved is -- according to
different analyst estimates -- 30 million to 40 million credits
more."
Parliamentary Scrutiny
The discount of UN carbon offsets for March 2013 against
those for December 2012 widened by 5 cents to 14 euro cents as
of 4:46 p.m. on London's ICE Futures Europe exchange.
The ban will apply to UN credits linked to HFC-23 and
nitrous oxide from adipic acid production from the Clean
Development Mechanism, the world's second-biggest CO2 market,
and the Joint Implementation program. The measure will be
subject to a three-month scrutiny by the European Parliament
before it's officially adopted by the commission.
The 23 projects that cut HFC-23 and nitrous oxide from
adipic acid production registered under the CDM account for two-
thirds of all credits generated by the mechanism, according to
the commission data. Most of them are located in China and other
developing countries.
In the 2008-2012 trading period, emitters in the European
program can swap as many as 1.6 billion UN credits with EU
permits on a one-for-one basis. The EU average annual emissions
cap for that period is 2.04 billion metric tons of carbon
dioxide, valued at nearly 30 billion euros at today's prices.
One permit represents one ton of CO2.
"Today´s vote marks an historic victory for environmental
integrity over financial interests and puts the EU ETS back on
the right track," said Natasha Hurley, EU policy adviser at
environmental lobby group CDM Watch. "While we welcome the
outcome of today´s vote, it's unfortunate that member states
were not entirely immune to pressure from a small group of
investors who lobbied hard to extract as many concessions as
possible throughout this 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>
--With assistance from Jonathan Stearns in Brussels and
Catherine Airlie and Mathew Carr in London. Editors: Alex
Devine, John Buckley.
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
