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Europeans Aim for `Swift Reaction' on UN CO2 Offsets, EU's Hedegaard Says
The European Union regulator wants to offer carbon markets a quick response on restrictions that could be imposed on United Nations offset credits for use in the bloc’s cap-and-trade system, the EU’s climate chief said.
The EU is working on a draft measure introducing further quality restrictions on offsets from industrial-gas projects after 2012. The European Commission, the bloc’s regulatory arm, has said it is concerned that credits related to hydrofluorocarbon-23 and nitrous oxide may be generating “windfall” profits for some developers.
“It will have to go through a lot of consultation procedures, but the aim is that it is for a swift reaction, because there’s something in the system that simply doesn’t work well enough,” Hedegaard said in an interview in Brussels today.
UN offsets, awarded on projects that lower emissions in developing nations, can be swapped on a one-for-one basis with EU permits for compliance in the European carbon program, the world’s largest.
Regulators of the UN Clean Development Mechanism are also ramping up scrutiny after allegations that some developers are seeking excessive credits related to HFC-23, an industrial gas whose warming potential is 11,700 times more powerful than carbon dioxide. They announced reviews of 10 issuances related to HFC projects this month, to assess whether the methodology for awarding those offsets should be changed.
‘Very Low Ebb’
The confidence of the carbon market in the CDM is at a “very low ebb,” the International Emissions Trading Association said last week. Private investors urgently need certainty from the commission about the use of UN offsets through 2020, the lobby said.
A commission proposal to impose limits on UN credits eligible for compliance in the EU emissions trading system would require member states’ approval to become binding. While political discussions on offsets have already started, it is “too early to say” when the draft measure will be presented, Hedegaard said.
“It’s very crucial for me as the commissioner for climate action that we have environmental integrity,” she said.
The EU’s emissions trading system, or ETS, covers more than 12,000 facilities that produce energy or goods ranging from paper to cement. Polluters must have an allowance for each ton of carbon dioxide they let off when burning fossil fuels. Those producing more than their allowance must buy more; those that emit less can sell their surplus.
The EU aims to make the ETS, started in 2005, the cornerstone of a global carbon market. The 27-nation bloc seeks to cut greenhouse gases by one-fifth by the end of this decade compared with 1990 levels and has said it may boost that target to 30 percent should other countries follow suit.
“There were some challenges in the beginning, in the first years, but I think they’ve been corrected and today I think that globally there will be an agreement that this is by and large a very good and sound system,” Hedegaard said. “Sometimes there can be corrections needed and then we’re doing that. ”
To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net;
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