Europe Should Consider CO2 Offsets to Cut Energy Bill, Global Carbon Says
Europe should consider using CO2 offsets that would also reduce natural gas prices when choosing which credits to allow into its emissions market in the eight years through 2020, said Global Carbon BV.
The European Union market should make room in its third phase, which runs from 2013, for credits under the Joint Implementation mechanism of the 1997 Kyoto Protocol, the second- biggest United Nations offset market, said Lennard de Klerk, managing director of Global Carbon, the Netherlands emissions- reduction developer.
The European Commission, the market’s regulator, said Oct. 28 it may ban credits from reducing hydrofluorocarbons and nitrous oxide. That may create space for 560 million metric tons of offsets in the eight years, according to an estimate by Bloomberg New Energy Finance in London last month.
Using offsets from projects that curb wasted natural gas in Russia and Ukraine or reduce fuel consumption in those nations would free up energy for the EU and cut prices, de Klerk said yesterday by phone. “A lot of people only have a climate-change picture,” he said. “You need to see the bigger picture, which includes energy supply.”
The EU should consider negotiating so-called bilateral agreements with Ukraine and Russia for after 2012, the final year with targets under Kyoto, de Klerk said. Those two nations could export offset credits to the bloc, assuming UN envoys continue to fail to seal a global climate-protection deal at talks that continue later this month in Cancun, Mexico.
“We really have to focus on these gap measures,” especially if there is little progress at Cancun, to create demand for credits, he said. De Klerk is also chairman of the Joint Implementation Action Group, a lobby group of eight project developers including Camco International Ltd.
Second Biggest
The so-called JI program has issued 24.5 million metric tons of Emission Reduction Units through October, according to e-mailed analysis from Vertis Environmental Finance, a Budapest, Hungary-based company that analyzes the carbon markets. About 40 percent of those are from Ukraine.
The Clean Development Mechanism, the biggest UN offset market, has supplied 450 million tons of Certified Emission Reduction credits since its first issuance in October 2005.
Emission Reduction Units, or ERUs, for settlement in December closed yesterday at 12.34 euros ($16.77) a ton in London on the ICE Futures Europe exchange, compared with 12.48 euros a ton for a comparable CER credit.
ERUs create incentives for emission-reduction projects in developed nations, including Russia and the former-Soviet states. Manufacturers and utilities can use ERUs and CERs to comply with emissions limits in the European CO2 market, the world’s largest.
Other developers are keen to fill any new EU demand. The bloc should allow use of emission credits from forest protection to fill any gap from the potential ban of some industrial-gas credits, Christian Del Valle, director of environmental markets and forestry at Paris-based BNP Paribas SA, said Nov. 10.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
Rate this Page