By Ewa Krukowska
Jan. 19 (Bloomberg) -- United Nations carbon offsets
dropped before a vote by European Union member states on a
proposal to ban some imported industrial gas credits from the
world's biggest emissions market.
UN Certified Emission Reductions for delivery in December
fell 0.5 percent to 11.08 euros ($14.90) a metric ton amid low
volumes as of 8:53 a.m. on London's ICE Futures Europe exchange.
They are down 15 percent since Aug. 25, when the European
Commission said it was preparing a draft to restrict the use of
UN offsets linked to hydrofluorocarbon-23 and nitrous oxide from
adipic acid production.
More than 11,000 facilities in the European cap-and-trade
program can now use UN offsets as a cheaper way to comply with
their pollution quotas. The commission, the EU regulator, has
said that credits related to the two industrial gases may create
windfall profits for investors and undermine the integrity of
the carbon market.
The ban would affect credits from the UN Clean Development
Mechanism, the world's second-biggest emissions market, and the Joint Implementation program as of Jan. 1, 2013. The CDM-
supervised credits are awarded to investors in projects that cut
greenhouse gases in developing nations.
The EU Climate Change Committee, including representatives
of the bloc's 27 national governments, is due to vote on the
commission proposal on Friday. The measure will then be subject
to a three-month scrutiny by the European Parliament and member
states before it is officially adopted by the commission.
'Broad Support'
National governments showed "broad support" for the
proposed ban and "are not discussing whether to do this but
when to do this," EU Climate Commissioner Connie Hedegaard told
a hearing in the European Parliament in Brussels on Jan. 12.
The current five-year phase in the EU emissions trading
program ends in 2012 and the deadline for surrendering
allowances for that year is the end of April 2013.
The International Emissions Trading Association called last
year on the commission and the EU governments to consider
delaying the planned ban to May 1, 2013, and provide for banking of international credits from emission reductions achieved up to
Dec. 31, 2012.
The Climate Change Committee may delay the date of
implementation, Trevor Sikorski , an analyst in London for
Barclays Capital, said yesterday. "I think there is a growing
expectation that the Climate Change Committee will ask for a
change in the date in order to pass the proposal," he said.
UN Premiums
Hedegaard said last week that after a first meeting with
member states in December, the commission was sticking to its
position on starting the ban on Jan. 1, 2013.
The premium of United Nations emissions credits for March
2013 reversed to a 13 cent discount compared with those for
December 2012, according to the spread contract traded today on
London's ICE Futures Europe exchange. That's the first such
discount since Dec. 13.
EU carbon permits for December 2011 delivery were little
changed at 14.64 euros a metric ton. The EU cap-and-trade system
requires companies to have a permit for each ton of CO2 they emit, with those that exceed their quotas having to buy more
allowances and businesses that emit less being able to sell
their surplus.
For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>
--With assistance from Mathew Carr and Catherine Airlie in
London. Editors: Mike Anderson, John Buckley.
To contact the reporter on this story:
Ewa Krukowska in Brussels +32-2-237-4331 or
ekrukowska@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net
