Europe Suggests Revisions to Carbon Trading Scheme
By REUTERS
November 25, 2010
BRUSSELS (Reuters) — The European Union’s executive commission has proposed banning by 2013 the most common types of carbon offsets, mostly from India and China, to help restore credibility to the disputed system.
The move comes ahead of the climate talks next week in Cancún, Mexico.
Europe’s Emissions Trading Scheme places caps on carbon gases emitted by industry but, under a separate system run by the United Nations, allows companies to offset emissions by paying for carbon cuts in developing countries, as a cheaper alternative to cutting their own.
The executive commission said that 80 percent of the disputed hydrofluorocarbon credits and 60 percent of the nitrous oxide credits came from China, and most of the rest came from India. The commission wants to stop exploitation of the system by project developers who are suspected of adjusting refrigerant plants to produce more of potent greenhouse gas hydrofluorocarbon 23 as a waste byproduct and then destroying it to claim the carbon offsets.
It proposed that from Jan. 1, 2013, the trading scheme should exclude offset credits from hydrofluorocarbon 23 and nitrous oxide credits from adipic acid production.
The move was closely watched by carbon traders, although they were likely to have partly factored in the ban after details of the decision were reported early this month.
Several members of a United Nations panel that oversees the international offsetting scheme agreed that the hydrofluorocarbon 23 scheme should be revised. Europe’s executive commission said the hydrofluorocarbon credits from industrial projects were overvalued in Europe by a factor of 78, discouraging the flow of money to more credible projects in the least developed countries.
“The rates of return of these projects are excessive,” it said in a statement. “The E.U. considers that cheap emission reductions, such as those from industrial gas projects, should not be done through the carbon market, but instead should be the responsibility of developing countries as part of their appropriate own action to keep global warming below 2 degrees Celsius.”
Europe’s top climate official has also said that some companies had been ”gaming the system” by increasing the production of industrial gases to maximize their credits.
But the International Emissions Trading Association questioned the European Union’s right to act alone. “There must be some consistency between U.N. and E.U. rules,” the association president, Henry Derwent, said. “There is a sense that the commission thinks it doesn’t matter what the United Nations rules are, and we are concerned about that.”
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