Update: EU Votes For Offset Ban To Start 1 January 2013
Update: EU Votes For Offset Ban To Start 1 January 2013
Update: EU Votes For Offset Ban To Start 1 January 2013
EU ETS
EU officials on Friday agreed to ban most industrial gas offsets from 1 January 2013.
The decision by the Climate Change Committee, which comprises representatives of the 27-nation bloc,
supports a European commission proposal to block the use of carbon credits generated from HFC 23 and
adipic acid N2O projects for the trading period 2013-2020.
“I very much welcome the committee’s decision to back this regulation, less than 5 months after I first
proposed the idea,” Connie Hedegaard, commissioner for climate action said in a statement.
“These projects raise concerns relating to their environmental integrity, value-for-money and
geographical distribution,” she said.
Hedegaard added: “Not only are some of these credits of doubtful value, continuing to sue them is also
not in the EU’s interest as doing so could discourage host countries from supporting cheaper and more
direct action to cut these emissions.”
The decision to support a January ban came as a surprise to the market, as most analysts and traders
predicted that the ban take effect from May 2013.
The price of carbon credits for delivery in March 2013, two months after the ban, surged to a 60 cent
premium over the December 2012 contract at 1046 GMT, nearly 70 cents up from a 9 cent discount
before the announcement.
Major ETS emitters had been lobbying for the offset restrictions to only apply after the April 2013
compliance deadline, when firms covered by the scheme must submit carbon allowances to match their
pollution for the previous year.
The later date would have paved the way for 30-40 million additional certified emission reductions
(CERs) available for compliance for the second phase (2008-2012), according to analysts.
The offset ban is likely to upset European buyers of CERs and project developers in China, India and
South Korea, home to most projects that destroy HFC 23 and adipic acid N2O under the Kyoto
protocol’s clean development mechanism (CDM).
These project types account for 72.5 per cent of the total number of CERs issued to CDM projects to
date, according to UN data. The ban also applied to the Kyoto’s joint implementation market.
Following today’s committee vote, the proposed ban on offsets will be subject to a three month scrutiny
by the European parliament, after which will be formally adopted by the European commission.
London
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