BNEF Cuts 2010 UN Carbon Offsets Issuance Forecast by Almost Fifth on HFCs

Bloomberg New Energy Finance reduced its forecast for the supply of carbon offsets this year to 85 million metric tons from 105 million tons after the regulators of the United Nations program boosted scrutiny.

The regulators of the UN Clean Development Mechanism, the world’s second-biggest carbon market, announced reviews of seven issuances related to projects cutting hydrofluorocarbons this month. They are assessing whether the methodology for awarding HFC-23 offsets should be changed after allegations of misuse.

“We expect all issuance requests from HFC projects to go into review until the underlying methodology issue is resolved, which cannot be expected before the next meeting of the methodologies panel in late October or even late November, when the executive board meeting is due,” said Marisa Beck, a BNEF analyst in London. “That means that issuances from HFC projects may even be delayed into 2011.”

UN Certified Emission Reduction credits are awarded on projects that lower emissions in developing nations and can be swapped on a one-for-one basis with permits in the European Union’s cap-and-trade program, the world’s largest. The EU has said projects related to HFC-23 and nitrous oxide may be generating “windfall” profits for some developers and will consider limits on using those offsets for compliance in its carbon program.

CERs for December 2010 gained as much as 1 percent to 13.61 euros ($17.28) a ton today, their highest level since May 12. The offsets extended this month’s gain to about 13 percent.

HFCs gained favor in the 1970s as an alternative to chlorofluorocarbons, which scientists linked to depletion of the ozone layer. While HFCs don’t interfere as much with the planet’s shield against damaging sunrays, they trap heat and contribute to global warming.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net; Mathew Carr in London at m.carr@bloomberg.net;

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