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UN Emissions Board Will Question All Hydrofluorocarbon Projects, IETA Says
United Nations-appointed regulators will probably question all projects seeking emission credits for reducing hydrofluorocarbon-23 gases, the International Emissions Trading Association said.
The Clean Development Mechanism Executive Board, backed by a Bonn-based secretariat, will request reviews for all HFC-23 projects as it questions the method used to determine how many credits to allot, said Kim Carnahan, policy leader of flexible mechanisms at the Geneva-based lobby group for emissions traders.
Regulators will review issuance of credits for a Chinese HFC plant, the fourth such project this week, the secretariat said today in a statement on its Web site. It said yesterday it would review whether to award credits to three other projects.
“They want to go through each issuance with a fine-tooth comb,” Carnahan said by phone. “We should expect delays in issuance.”
Projects that cut HFC-23 gases make up 52 percent of current supply of credits created under the UN-overseen CDM, the world’s second-biggest carbon market by trading volume after the European Union’s program. A review may delay each issuance by about two months or more, said Marisa Beck, an analyst in London for Bloomberg New Energy Finance. She cited new review procedures adopted by the board July 30.
The discount for 2010 UN credits against EU permits narrowed 4.7 percent today to 1.81 euros ($2.33) a metric ton, the lowest difference since April 30, according to the spread contract traded on the European Climate Exchange in London as of 6 p.m. local time. It shrank 9.5 percent yesterday.
Issuance Reviews
The request for review of the Changshu 3F Zhonghao New Chemicals Materials Co. plant, backed by BP Plc, Deutsche Bank AG, Enel SpA and RWE AG, reflected concerns that such projects were getting “excessive” credits, the secretariat said. The UN board asked for additional information, including demand for products made from the processes that create the greenhouse gas.
HFC-23 is emitted in the production of chemicals for air conditioning and refrigeration, contributing to climate change by trapping heat in the earth’s atmosphere. The gas’s warming effect is 11,700 times more powerful than carbon dioxide.
Clifford Mahlung, the executive board’s chairman, said in February the regulator’s members could not agree how to approve Chinese renewable energy projects seeking credits.
The board seems to have a “significant governance problem,” Carnahan said. “It’s like a hung jury.”
‘Urgently Investigate’
The U.K. told the executive board to “urgently investigate accusations” that credits awarded to HFC-23-cutting projects may not represent actual emission reductions from business as usual, according to a July 1 letter from Chris Huhne, the U.K’s energy and climate change minister, to Mahlung.
CDM Watch, a Bonn-based environmental lobby group, gave evidence to the board that the methodology for giving Certified Emission Reduction credits for HFC-23 destruction was inadequate and created a perverse incentive to raise HFC-23 production.
The UN Framework Convention on Climate Change secretariat appointed Lambert Schneider to a role in its emissions-trading unit. Schneider, who analyzed HFC-23 credits for CDM Watch, will work in the standard-setting division, the UNFCCC said today in an e-mailed statement.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net
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